UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _________ TO _________

Commission File Number 001-41092

Firefly Neuroscience, Inc.

(Exact name of registrant as specified in its charter)

Delaware		54-1167364
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1100 Military Road, Kenmore, NY 14217

(Address of principal executive offices) (Zip code)

(888) 237-6412

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		AIFF		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 6, 2025, there were a total of 13,482,511 shares of the registrant’s common stock outstanding.

FIREFLY NEUROSCIENCE, INC.

Quarterly Report on Form 10-Q

Period Ended September 30, 2025

TABLE OF CONTENTS

		Page Number
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	2
	Condensed Consolidated Statements of Equity (Deficit) for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
	Signatures	30

Part I.

Financial Information

Item 1. Financial Statements.

FIREFLY NEUROSCIENCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024

(IN THOUSANDS, EXCEPT SHARE DATA)

	September 30,			December 31,
	2025			2024
	(Unaudited)
ASSETS
Current assets
Cash	$	4,325		$	1,810
Other receivables		184			121
Prepaid expenses		841			697
Inventory		80			-
Total current assets		5,430			2,628
Non current assets
Prepaid expenses		669			1,657
Equipment, net		235			136
Intangible assets, net		898			180
Goodwill		5,175			-
Total non current assets		6,977			1,973
TOTAL ASSETS	$	12,407		$	4,601

LIABILITIES
Current liabilities
Trade payables	$	1,345		$	1,816
Accrued liabilities		658			1,626
Deferred revenue		238			13
Convertible promissory note, net of unamortized discount		-			694
Deemed dividend liability		-			-
Contingent consideration payable		478			-
Derivative liability		-			827
Total current liabilities		2,719			4,976
Non current liabilities
Deferred revenue		31			-
TOTAL LIABILITIES	$	2,750		$	4,976

COMMITMENTS AND CONTINGENCIES (Note 12)

SHAREHOLDERS’ EQUITY (DEFICIT)
Preferred shares, $0.0001 par value: 1,000,000 shares authorized; nil issued and outstanding at September 30, 2025 and December 31, 2024		-			-
Common shares, $0.0001 par value: 100,000,000 shares authorized; 13,477,012 and 8,122,060 issued and outstanding at September 30, 2025 and December 31, 2024, respectively		1			1
Additional paid-in capital		118,552			86,708
Accumulated deficit		(108,896	)		(87,084	)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		9,657			(375	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	12,407		$	4,601

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FIREFLY NEUROSCIENCE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024

REVENUE	$	388		$	33		$	730		$	55
COST OF GOODS SOLD		242			-			267			-
GROSS PROFIT		146			33			463			55

OPERATING EXPENSES:
Research and development expenses		378			878			1,026			1,517
Selling and marketing expenses		265			431			672			973
General and administration expenses		2,007			2,992			4,968			4,183
Impairment of intangible assets		152			-			152			-
TOTAL OPERATING EXPENSES		2,802			4,301			6,818			6,673

OPERATING LOSS		(2,656	)		(4,268	)		(6,355	)		(6,618	)

OTHER INCOME (EXPENSE)
Interest and bank fees		(10	)		(24	)		(153	)		(36	)
Interest income		29			-			59			-
Unrealized gain (loss) on foreign exchange		-			(2	)		(4	)		1
Change in derivative fair value		-			-			(9,369	)		-
Loss on settlement		-			-			(1,353	)		-
Other income (expense), net		(2	)		5			(223	)		(22	)
TOTAL OTHER INCOME (EXPENSE)		17			(21	)		(11,043	)		(57	)

LOSS BEFORE INCOME TAX		(2,639	)		(4,289	)		(17,398	)		(6,675	)

Income tax provision		-			-			4			-

NET LOSS AND COMPREHENSIVE LOSS	$	(2,639	)	$	(4,289	)	$	(17,402	)	$	(6,675	)

Deemed dividend on warrant inducement		-			-			(4,410	)		-

NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		(2,639	)		(4,289	)		(21,812	)		(6,675	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.20	)	$	(0.61	)	$	(1.81	)	$	(1.15	)

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING, BASIC AND DILUTED		13,497,668			7,080,897			12,054,020			5,828,054

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FIREFLY NEUROSCIENCE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

SEPTEMBER 30, 2025 AND 2024

(IN THOUSANDS, EXCEPT SHARE DATA)

	Preferred stock								Common stock													Total
				Number of							Number of					Additional						Shareholder’s
	Number of			shares to					Number of		shares to					paid-in			Accumulated			equity
	shares			be issued			Amount		shares		be issued			Amount		capital			deficit			(deficit)

BALANCE AT DECEMBER 31, 2024		-			-		$	-		8,122,060		-		$	-	$	86,709		$	(87,084	)	$	(375	)
Private placement, net of issuance costs		-			-			-		547,737		-			-		1,464			-			1,464
Shares issued - warrants exercised		-			-			-		2,186,595		-			1		8,827			-			8,828
Shares issued for conversion of Convertible Promissory Note		-			-			-		800,000		-			-		12,329			-			12,329
Shares issues for consulting services		-			-			-		22,344		-			-		32			-			32
Share-based compensation expense		-			-			-		-		-			-		247			-			247
Deemed dividend on warrant inducement		-			-			-		-		-			-		-			(4,410	)		(4,410	)
Net loss		-			-			-		-		-			-		-			(12,930	)		(12,930	)
BALANCE AT MARCH 31, 2025		-			-		$	-		11,678,736		-		$	1	$	109,608		$	(104,424	)	$	5,185
Private placement, net of issuance costs		-			-			-		340,000		-			-		1,135						1,135
Shares issued for debt		-			-			-		37,549		-			-		383			-			383
Shares issued for Evoke acquisition		-			-			-		857,142		-			-		2,743			-			2,743
Share-based compensation expense		-			-			-		45,411		-			-		77			-			77
Deemed dividend on warrant inducement		-			-			-		340,000		-			-		4,410			-			4,410
Net loss		-			-			-		-		-			-		-			(1,833	)		(1,833	)
BALANCE AT JUNE 30, 2025		-			-		$	-		13,298,838		-		$	1	$	118,356		$	(106,257	)	$	12,100
Private placement, net of issuance costs		-			-			-				-			-		(29	)		-			(29	)
Shares issued - warrants exercised		-			-			-		194,796		-			-		10			-			10
Share-based compensation expense		-			-			-		39,162		-			-		215			-			215
Net loss		-			-			-		-		-			-		-			(2,639	)		(2,639	)
BALANCE AT SEPTEMBER 30, 2025		-			-		$	-		13,532,796		-		$	1	$	118,552		$	(108,896	)	$	9,657

BALANCE AT DECEMBER 31, 2023		1,676,165			(1,516,199	)	$	-		3,678,550		1,516,199		$	-	$	76,733		$	(76,624	)	$	109
Series B Preferred Stock conversion		(1,516,199	)		1,516,199			-		1,516,199		(1,516,199	)		-		-			-			-
Series C Preferred Stock Units offering		86,999			-			-		-		-			-		945			-			945
Share-based compensation expense		-			-			-		-		-			-		59			-			59
Net loss		-			-			-		-		-			-		-			(1,122	)		(1,122	)
BALANCE AT MARCH 31, 2024		246,965			-			-		5,194,749		-			-	$	77,737		$	(77,746	)	$	(9	)
Series B Preferred Stock conversion		-			-			-		-		-			-		-			-			-
Series C Preferred Stock Units offering		(46	)		-			-		-		-			-		-			-			-
Share-based compensation expense		-			-			-		-		-			-		58			-			58
Net loss		-			-			-		-		-			-		-			(1,264	)		(1,264	)
BALANCE AT JUNE 30, 2024		246,919			-		$	-		5,194,749		-		$	-	$	77,795		$	(79,010	)	$	(1,215	)
Share exchange: former shareholders of WaveDancer		-			-			-		802,142		-			-		(205	)		-			(205	)
Series C Preferred Stock Units offering		(246,919	)		-			-		596,145		-			-		-			-			-
Private placement net of issuance costs		-			-			-		319,207		-			-		3,448			-			3,448
Shares issued for debt		-			-			-		10,588		-			-		39			-			39
shares issued for future settlement of debt		-			-			-		45,344		-			-		-			-			-
shares issued for consulting services		-			-			-		22,344		-			-		209			-			209
shares issued for prepaid services		-			-			-		433,360		-			-		2,440			-			2,440
shares issued - stock options, warrants, and RSU exercises		-			-			-		494,438		-			-		32			-			32
Share Based Compensation Expense		-			-			-		-		-			-		2,316			-			2,316
Unvested shares issued to directors		-			-			-		557,885		-			-		-			-			-
Net loss		-			-			-		-		-			-		-			(4,289	)		(4,289	)
BALANCE AT SEPTEMBER 30, 2024		-			-		$	-		8,476,202		-		$	-	$	86,074		$	(83,299	)	$	(2,775	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FIREFLY NEUROSCIENCE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(IN THOUSANDS)

	Nine Months Ended
	September 30,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(17,402	)	$	(6,675	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		120			8
Impairment of intangible asset		152			-
Share-based compensation expense		539			2,433
Accretion expense on convertible promissory note		126			-
Change in derivative fair value		9,369			-
Loss on settlement of convertible promissory note		1,353			-
Loss on shares issued for debt		217			-
Expense recognized from prepaid credits used originally issued with shares		601			-
Shares issued for consulting services		32			209
Changes in operating assets and liabilities:
Change in receivables		(18	)		(139	)
Change in prepaid expenses		245			(533	)
Change in inventory		(9	)		-
Change in trade payables		(632	)		574
Change in accrued liabilities		(1,058	)		(814	)
Change in deferred revenue		(24	)		-
Net cash used in operating activities		(6,389	)		(4,937	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of new business, net of cash acquired		(2,360	)		-
Purchase of equipment		(105	)		(68	)
Product enhancement – intangible asset		-			(408	)
Proceeds from recapitalization transaction					75
Net cash used in investing activities		(2,465	)		(401	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of shares, net of issuance costs		2,531			4,393
Proceeds from exercise of warrants		8,838			32
Net cash provided by financing activities		11,369			4,425
INCREASE (DECREASE) IN CASH		2,515			(913	)
BALANCE OF CASH AT THE BEGINNING OF PERIOD		1,810			2,143
BALANCE OF CASH AT THE END OF PERIOD	$	4,325		$	1,230

Supplemental cash flow information
Cash paid for interest		-			11
Cash paid for income taxes		-			-

Non-cash investing and financing activities
Deemed issuance of common shares to former shareholders’ of WaveDancer		-			195
Share issuance for prepaid services		-			2,440
Shares issued for conversion of the convertible promissory note		12,339			-
Deemed dividend on warrant inducement		4,410			-
Shares issued for debt		426			39
Shares issued for Acquisition of new business		2,743			-
Non-cash acquisition of equipment		25			-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FIREFLY NEUROSCIENCE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1: BUSINESS DESCRIPTION

Overview

Firefly Neuroscience, Inc. (formerly WaveDancer, Inc.), a Delaware corporation, and its wholly owned subsidiaries Firefly Neuroscience 2023, Inc., a Delaware corporation (formerly known as Firefly Neuroscience, Inc.), Firefly Neuroscience Ltd., an Israeli corporation (formerly known as Elminda Ltd.), Elminda 2022 Inc., a Delaware corporation (formerly known as Elminda Inc.), Firefly Neurosciences Canada Inc., a Canadian corporation, and Elminda Canada Inc., a Canadian corporation (collectively, the “Company”), are engaged in the development, marketing and distribution of medical devices and technology allowing high resolution visualization and evaluation of the complex neuro-physiological interconnections of the human brain.

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, the Merger closed, and on August 13, 2024, we began trading on the Nasdaq Capital Market under the ticker symbol “AIFF.”

On April 30, 2025, the Company acquired all outstanding stock of Evoke Neuroscience, Inc. (“Evoke”), a Delaware corporation, a privately held company which provides customers with a package of hardware and software to measure the electrical activity of the brain.

NOTE 2: GOING CONCERN

As of September 30, 2025, the Company had an accumulated deficit of $108,896 and negative cash flow from operating activities for the nine months ended September 30, 2025, of $6,389. Further, the Company has recurring losses with minimal revenue from operations and expects to continue generating losses and using cash for operations. On April 30, 2025, the Company paid $3,000 of cash for the acquisition of Evoke (Note 4). The Company’s cash requirements have been met through the sales of common stock, issuance of debt and warrant exercises. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.

Management of the Company has a reasonable expectation that the Company can continue raising additional capital to continue in operational existence for the foreseeable future. Ability to raise additional funds will depend on, among other factors, financial, economic and market conditions, many of which are outside of our control and there can be no assurance that the Company will be able to obtain additional funding on satisfactory terms or at all.

NOTE 3: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any subsequent period or for the entire period. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended December 31, 2024, and the notes thereto included in the Company’s Form 10-K filed with the SEC on April 3, 2025. Certain information and footnote disclosures normally included in the audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in the accompanying unaudited condensed consolidated financial statements. All amounts are disclosed in thousands, except share and per share amounts. The accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, except as otherwise indicated, necessary for a fair statement of its consolidated financial position, results of operations, and cash flows of the Company for all periods presented.

Principles of consolidation

These unaudited consolidated financial statements include the financial information of the Company and its subsidiaries. The Company consolidates legal entities in which it holds a controlling financial interest. The Company has a two-tier consolidation model: one focused on voting rights (the voting interest model) and the second focused on a qualitative analysis of power over significant activities and exposure to potentially significant losses or benefits (the variable interest model). All entities are first evaluated to determine whether they are variable interest entities (“VIE”). If an entity is determined not to be a VIE, it is assessed on the basis of voting and other decision-making rights under the voting interest model. The accounts of the subsidiaries are prepared for the same reporting period using consistent accounting policies. All intercompany balances and transactions were eliminated on consolidation.

Use of estimates in the preparation of consolidated financial statements

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates and assumptions, and such differences could be material to the Company’s financial position and results of operations.

Significant accounting policies

Apart from Business Combinations, Goodwill, Intangible Assets, and Inventory as described below, there have been no new or material changes to the significant accounting policies discussed in the Company’s audited consolidated financial statements for the year ended December 31, 2024.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of an acquisition is allocated to the assets acquired and liabilities assumed based on their fair values, as determined by management at the acquisition date. Contingent consideration expected to be paid upon achievement of negotiated milestones are recognized at the acquisition date as part of the fair value transferred in exchange for the acquired business. Contingent consideration arrangements are remeasured at fair value at each reporting period until settled or expiration of the arrangement. Examples of critical estimates in valuing certain of the intangible assets acquired include, but are not limited to, future expected cash inflows and outflows, expected useful life, discount rates and income tax rates. Acquisition-related costs incurred in connection with a business combination are expensed as incurred and are included in general and administrative expenses in the condensed consolidated statements of operations.

Goodwill

Goodwill is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including other

SEC Form 10-Q filed by Firefly Neuroscience Inc.