Core Insights - Firefly Neuroscience, Inc. has announced a partnership with HealingMaps and Advanced Behavioral Strategies to enhance access to its AI-driven brain health analytics platform for clinics specializing in ketamine and psychedelic-assisted therapies [1][2][5] - The collaboration follows the launch of the Healing Health Alliance, a Group Purchasing Organization aimed at supporting clinics in the psychedelic therapy space [2] - Firefly's platform utilizes non-invasive EEG assessments and AI to provide objective brain health analytics, addressing the limitations of traditional subjective assessments in neurological and mental health care [3][9] Company Overview - Firefly Neuroscience is an AI company focused on improving brain health outcomes through innovative solutions, with a proprietary database of over 180,000 EEG/ERP brain scans, making it the largest known repository of its kind [6] - The company's technology is FDA-510(k)-cleared and aims to revolutionize diagnostic and treatment monitoring for conditions such as depression, dementia, anxiety disorders, concussions, and ADHD [6] Benefits of the Partnership - The partnership allows clinics to access Firefly's objective brain health analytics, which can enhance treatment outcomes and create new revenue opportunities [5][9] - The platform provides measurable brain health changes correlated to treatments, improving patient confidence and engagement in their care [9]

Core Insights - Firefly Neuroscience has launched its new 'CLEAR' Platform, which enhances EEG data quality and processing speed, utilizing NVIDIA's L40S GPU technology [1][3] - The CLEAR Platform significantly improves the reliability of EEG recordings by reducing noise and artifacts, enabling better detection of neural biomarkers for neurological and psychiatric conditions [2][4] - The platform achieves a 60-80% improvement in processing times, leveraging advanced signal processing and machine learning techniques [3][4] Company Overview - Firefly Neuroscience is focused on developing AI-driven solutions to improve brain health outcomes for patients with neurological and mental disorders [5][6] - The company has built a comprehensive database of brain wave tests over the past 15 years, securing patent protection and achieving FDA clearance for its Brain Network Analytics (BNA™) technology [5][6] - BNA™ technology aims to enhance diagnostic and treatment monitoring methods for various conditions, including depression, dementia, and ADHD [5][6]

Core Insights - Firefly Neuroscience has launched its new 'CLEAR' Platform, which enhances EEG data quality and processing speed, utilizing NVIDIA's L40S GPU technology [1][3] - The CLEAR Platform significantly improves the reliability of EEG recordings, enabling better detection of neural biomarkers for neurological and psychiatric conditions [2][4] - The company aims to leverage the CLEAR Platform as a key component of its growth strategy, focusing on transforming neuroscience and clinical development through AI and EEG technology [4][5] Company Overview - Firefly Neuroscience, Inc. is an AI company dedicated to improving brain health outcomes for patients with neurological and mental disorders [5] - The company has developed the FDA-510(k) cleared Brain Network Analytics (BNA™) technology, which enhances diagnostic and treatment monitoring for various conditions [5][6] - Firefly has built a comprehensive database of over 17,000 standardized EEGs, which supports its innovative solutions in clinical settings [6]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Firefly Neuroscience, Inc., including balance sheets, statements of operations, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | ASSETS/LIABILITIES/EQUITY | June 30, 2025 (Unaudited) | December 31, 2024 | | :------------------------ | :------------------------ | :------------------ | | **ASSETS** | | | | Cash | $5,918 | $1,810 | | Total current assets | $7,531 | $2,628 | | Total non current assets | $7,407 | $1,973 | | **TOTAL ASSETS** | **$14,938** | **$4,601** | | **LIABILITIES** | | | | Total current liabilities | $2,795 | $4,976 | | Total non current liabilities | $43 | $- | | **TOTAL LIABILITIES** | **$2,838** | **$4,976** | | **SHAREHOLDERS' EQUITY (DEFICIT)** | **$12,100** | **($375)** | | **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | **$14,938** | **$4,601** | - Total assets increased significantly from **$4,601 thousand** at December 31, 2024, to **$14,938 thousand** at June 30, 2025, primarily driven by an increase in cash and the acquisition of goodwill and intangible assets[11](index=11&type=chunk) - Shareholders' equity shifted from a deficit of **$375 thousand** at December 31, 2024, to a positive equity of **$12,100 thousand** at June 30, 2025, largely due to capital raises and warrant exercises[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | REVENUE | $299 | $10 | $342 | $22 | | GROSS MARGIN | $274 | $10 | $317 | $22 | | OPERATING LOSS | ($1,634) | ($1,259) | ($3,699) | ($2,350) | | NET LOSS | ($1,833) | ($1,264) | ($14,763) | ($2,386) | | BASIC AND DILUTED LOSS PER SHARE | ($0.14) | ($0.24) | ($1.69) | ($0.46) | - Revenue increased significantly for both the three-month and six-month periods ended June 30, 2025, primarily due to the acquisition of Evoke Neuroscience[13](index=13&type=chunk)[133](index=133&type=chunk)[141](index=141&type=chunk) - Net loss widened substantially for the six months ended June 30, 2025, to **$14,763 thousand**, compared to **$2,386 thousand** in the prior year, largely due to a change in derivative fair value and loss on settlement of a convertible promissory note[13](index=13&type=chunk)[147](index=147&type=chunk) [Condensed Consolidated Statements of Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(Deficit)) Outlines changes in shareholders' equity, including capital raises, warrant exercises, and net loss Changes in Shareholders' Equity (Deficit) (in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance at December 31, 2024/2023 | ($375) | $109 | | Private placement, net of costs | $2,600 | $945 | | Shares issued - warrants exercised | $8,828 | $- | | Shares issued for conversion of Note | $12,329 | $- | | Shares issued for Evoke acquisition | $2,743 | $- | | Share-based compensation expense | $324 | $117 | | Deemed dividend on warrant inducement | ($4,410) | $- | | Net loss | ($14,763) | ($2,386) | | Balance at June 30, 2025/2024 | $12,100 | ($1,215) | - Total shareholders' equity increased significantly from a deficit of **$375 thousand** at December 31, 2024, to a positive **$12,100 thousand** at June 30, 2025, primarily driven by proceeds from private placements, warrant exercises, and shares issued for the conversion of a convertible promissory note and the Evoke acquisition[15](index=15&type=chunk)[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | ($4,901) | ($2,418) | | Net cash used in investing activities | ($2,379) | ($312) | | Net cash provided by financing activities | $11,388 | $945 | | Increase (decrease) in cash | $4,108 | ($1,785) | | Cash at end of period | $5,918 | $358 | - Net cash used in operating activities increased by **103%** to **$4,901 thousand** for the six months ended June 30, 2025, primarily due to increased operating costs and the Evoke acquisition[18](index=18&type=chunk)[154](index=154&type=chunk) - Net cash provided by financing activities surged by **1,105%** to **$11,388 thousand**, driven by warrant exercises and unit offerings in March and June 2025[18](index=18&type=chunk)[157](index=157&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures for the financial statements, covering accounting policies and significant events [NOTE 1: BUSINESS DESCRIPTION](index=9&type=section&id=NOTE%201:%20BUSINESS%20DESCRIPTION) Describes the company's core business, products, and recent strategic acquisitions - Firefly Neuroscience, Inc. develops and distributes medical devices and technology for high-resolution visualization and evaluation of human brain neuro-physiological interconnections[20](index=20&type=chunk) - On **April 30, 2025**, the Company acquired Evoke Neuroscience, Inc., a privately held company providing hardware and software to measure brain electrical activity, expanding its capacity and customer base[20](index=20&type=chunk)[41](index=41&type=chunk) [NOTE 2: GOING CONCERN](index=9&type=section&id=NOTE%202:%20GOING%20CONCERN) Addresses the company's ability to continue operations given its financial condition and accumulated deficit - As of June 30, 2025, the Company had an accumulated deficit of **$106,257 thousand** and negative cash flow from operating activities of **$4,901 thousand** for the six months ended June 30, 2025[21](index=21&type=chunk) - These conditions raise substantial doubt about the Company's ability to continue as a going concern, though management expects to raise additional capital[21](index=21&type=chunk)[22](index=22&type=chunk) [NOTE 3: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%203:%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Explains the financial statement preparation basis and key accounting policies, including recent changes - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include the financial information of the Company and its subsidiaries, with all intercompany balances and transactions eliminated[23](index=23&type=chunk)[25](index=25&type=chunk) - Significant accounting policies for Business Combinations, Goodwill, Intangible Assets, and Inventory have been newly adopted or materially changed, reflecting the Evoke acquisition[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - Revenue is recognized based on a five-step model (ASC 606) for EEG testing, equipment rental/sales, projects, and clinical studies, with deferred revenue representing payments received in advance of performance obligations[34](index=34&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk) [NOTE 4: BUSINESS COMBINATION](index=12&type=section&id=NOTE%204:%20BUSINESS%20COMBINATION) Details the acquisition of Evoke Neuroscience, including purchase price, allocation, and financial impact - On **April 30, 2025**, Firefly Neuroscience acquired Evoke Neuroscience, Inc. for a total purchase price of **$6,221 thousand**[41](index=41&type=chunk)[47](index=47&type=chunk) Evoke Neuroscience Acquisition Purchase Consideration (in thousands) | Component | Amount (in thousands) | | :------------------ | :-------------------- | | Cash | $3,000 | | Common stock | $2,743 | | Earn-Out Shares | $478 | | **Total Purchase Consideration** | **$6,221** | Preliminary Purchase Price Allocation and Goodwill (in thousands) | Item | Allocation (in thousands) | | :------------------------ | :------------------------ | | Developed technology | $700 | | Trade name | $150 | | Non-compete agreements | $110 | | Working capital | $139 | | Security deposit | $3 | | Deferred revenue, non-current | ($56) | | Fair Value of Identified Net Assets | $1,046 | | **Goodwill** | **$5,175** | - Goodwill of **$5,175 thousand** was recorded, representing the excess of the purchase price over the fair value of net assets acquired, attributed to reputation, workforce, and synergies[50](index=50&type=chunk)[56](index=56&type=chunk) - The acquisition contributed **$251 thousand** in revenues and a net loss of **$12 thousand** to the Company's consolidated results from **April 30, 2025**, to **June 30, 2025**[57](index=57&type=chunk) [NOTE 5: ACCOUNTS RECEIVABLE](index=16&type=section&id=NOTE%205:%20ACCOUNTS%20RECEIVABLE) Provides a breakdown of accounts receivable and the allowance for expected credit losses Accounts Receivable (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Accounts receivable | $200 | $233 | | Allowance for expected credit losses | ($3) | ($112) | | **Total** | **$197** | **$121** | - Net accounts receivable increased to **$197 thousand** at June 30, 2025, from **$121 thousand** at December 31, 2024, despite a decrease in gross accounts receivable, due to a significant reduction in the allowance for expected credit losses[60](index=60&type=chunk) [NOTE 6: PREPAID EXPENSES](index=16&type=section&id=NOTE%206:%20PREPAID%20EXPENSES) Details current and non-current prepaid expenses, including shares issued for prepaid services Prepaid Expenses (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Shares issued for prepaid services (current) | $658 | $417 | | Prepaid expenses (current) | $625 | $280 | | **Total (current)** | **$1,283** | **$697** | | Shares issued for prepaid services (non-current) | $584 | $974 | | Prepaid expenses (non-current) | $416 | $683 | | **Total (non-current)** | **$1,000** | **$1,657** | - Total current prepaid expenses increased to **$1,283 thousand** at June 30, 2025, from **$697 thousand** at December 31, 2024, while non-current prepaid expenses decreased to **$1,000 thousand** from **$1,657 thousand**[61](index=61&type=chunk) [NOTE 7: INVENTORY](index=17&type=section&id=NOTE%207:%20INVENTORY) Reports the composition of inventory, including raw materials and finished goods Inventory (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Raw Materials | $117 | $- |\n| Finished Goods | $16 | $- | | **Total** | **$133** | **$-** | - The Company reported inventory of **$133 thousand** at June 30, 2025, consisting of raw materials and finished goods, with no inventory reported at December 31, 2024, indicating new product-related activities, likely from the Evoke acquisition[62](index=62&type=chunk) [NOTE 8: EQUIPMENT](index=17&type=section&id=NOTE%208:%20EQUIPMENT) Presents the net value of equipment, including medical equipment and accumulated depreciation Equipment, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Medical equipment, cost | $139 | $148 | | Medical equipment subject to operating leases, cost | $27 | $- | | Less – accumulated depreciation | ($31) | ($12) | | **Equipment, net** | **$135** | **$136** | - Net equipment remained relatively stable at **$135 thousand** at June 30, 2025, compared to **$136 thousand** at December 31, 2024, with new medical equipment subject to operating leases totaling **$27 thousand**[63](index=63&type=chunk) [NOTE 9: INTANGIBLE ASSETS, NET AND GOODWILL](index=18&type=section&id=NOTE%209:%20INTANGIBLE%20ASSETS,%20NET%20AND%20GOODWILL) Details the company's intangible assets and goodwill, primarily from the Evoke acquisition Intangible Assets, Net (in thousands) | Intangible Asset | Gross Carrying Amount (June 30, 2025) | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (Dec 31, 2024) | | :-------------------- | :------------------------------------ | :---------------------------------- | :--------------------------------- | | BNA software | $1,109 | $161 | $180 | | Developed technology | $700 | $687 | $- | | Trade names | $150 | $142 | $- | | Non-compete agreements | $110 | $107 | $- | | **Total intangible assets** | **$2,069** | **$1,097** | **$180** | - Total net intangible assets increased significantly to **$1,097 thousand** at June 30, 2025, from **$180 thousand** at December 31, 2024, primarily due to the acquisition of developed technology, trade names, and non-compete agreements from Evoke[65](index=65&type=chunk) Goodwill (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Balance, beginning of year | $- | $- | | Acquired in Evoke business combination | $5,175 | $- | | **Balance, end of period** | **$5,175** | **$-** | - Goodwill of **$5,175 thousand** was recognized as of June 30, 2025, entirely from the Evoke business combination[66](index=66&type=chunk) [NOTE 10: CONVERTIBLE PROMISSORY NOTE](index=19&type=section&id=NOTE%2010:%20CONVERTIBLE%20PROMISSORY%20NOTE) Explains the conversion of a promissory note into common stock and related financial impacts - A convertible promissory note of **$2,400 thousand**, issued on **December 20, 2024**, was converted into **800,000 shares** of common stock at **$3.00 per share** on **February 13, 2025**[67](index=67&type=chunk) - The conversion resulted in a loss of **$9,369 thousand** due to the change in derivative fair value and an additional loss of **$1,353 thousand** on the settlement of the note[67](index=67&type=chunk) [NOTE 11: LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT](index=19&type=section&id=NOTE%2011:%20LIABILITY%20FOR%20EMPLOYEE%20RIGHTS%20UPON%20RETIREMENT) Describes the company's obligations for employee severance pay under Israeli labor law - The Company is subject to Israeli labor law requiring monthly deposits for employee severance pay, which amounted to **$22 thousand** for the six months ended June 30, 2025, consistent with the prior year[68](index=68&type=chunk) [NOTE 12: COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%2012:%20COMMITMENTS%20AND%20CONTINGENCIES) Outlines contingent liabilities, equity line of credit, and absence of material pending litigation - The Company has a contingent liability of **$5,782 thousand** to the Israel Innovation Authority (IIA) for royalties on sales of products developed with IIA grants, repayable at **3.0%** of BNA™ sales, but no liability is recognized until commercial feasibility is certain[69](index=69&type=chunk) - An equity line of credit agreement allows the Company to sell up to **$10,000 thousand** in common stock, with a **$300 thousand** commitment fee and **$36 thousand** in deferred offering costs recorded as non-current prepaid expenses[71](index=71&type=chunk) - The Company is not aware of any currently pending litigation that could have a material adverse effect on its operations or financial position[72](index=72&type=chunk)[177](index=177&type=chunk) [NOTE 13: EQUITY](index=21&type=section&id=NOTE%2013:%20EQUITY) Details significant equity transactions, including share issuances, warrant activity, and share-based compensation - Significant equity activities during the six months ended June 30, 2025, include the conversion of a promissory note into **800,000 common shares**, issuance of **547,737 common shares** and warrants in a **March 2025** private placement, issuance of **340,000 common shares** via an inducement agreement, and **857,142 shares** for the Evoke acquisition[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - A **June 2025** offering issued **400,000 units**, comprising common stock or prefunded warrants, and two types of common stock purchase warrants (**$3.50** and **$4.00** exercise prices)[76](index=76&type=chunk) Warrant Activity (Six Months Ended June 30, 2025) | Item | Number of Warrants | | :------------------------------------ | :----------------- | | Outstanding warrants, January 1, 2025 | 1,971,216 | | PIPE 2025 warrants | 547,737 | | PIPE 2025 broker warrants | 25,958 | | $3.50 Warrants | 400,000 | | $4.00 Warrants | 400,000 | | Exercised | (1,623,530) | | **Outstanding warrants, June 30, 2025** | **1,721,381** | - Warrant exercises generated **$8,825 thousand** in proceeds, including **$5,625 thousand** from PIPE 2024 warrants and **$3,200 thousand** from Convertible Promissory Note Warrants[79](index=79&type=chunk)[80](index=80&type=chunk)[121](index=121&type=chunk) - Share-based compensation expense for the six months ended June 30, 2025, included **$43 thousand** for stock options, **$71 thousand** for RSUs, and **$167 thousand** for DSUs[83](index=83&type=chunk)[89](index=89&type=chunk)[93](index=93&type=chunk) [NOTE 14: BASIC AND DILUTED NET LOSS PER SHARE](index=26&type=section&id=NOTE%2014:%20BASIC%20AND%20DILUTED%20NET%20LOSS%20PER%20SHARE) Explains the calculation of basic and diluted net loss per share and potential anti-dilutive shares - Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares outstanding[96](index=96&type=chunk) - Diluted net loss per share considers potential dilutive shares from stock options, warrants, RSUs, and DSUs, but no adjustments were made for the periods presented as conversion would be anti-dilutive[97](index=97&type=chunk) Potential Anti-Dilutive Shares (in thousands) | Item | 2025 | 2024 | | :------------------------------------ | :-------- | :------ | | Warrants | 1,721,381 | 335,214 | | Stock options | 376,269 | 134,333 | | Unvested RSUs | 311,194 | - | | Unvested DSUs | 16,668 | - | | Shares issuable pursuant to Series C Preferred Stock | - | 246,965 | | **Total** | **2,425,512** | **716,512** | [NOTE 15: REVENUE, NET](index=27&type=section&id=NOTE%2015:%20REVENUE,%20NET) Provides a breakdown of revenue by type of goods and services and deferred revenue Revenue by Type of Goods and Services (in thousands) | Type of goods and services | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service | $223 | $10 | $232 | $22 | | Rentals | $32 | $- | $66 | $- | | Product sales | $44 | $- | $44 | $- | | **Total** | **$299** | **$10** | **$342** | **$22** | - Total revenue for the six months ended June 30, 2025, increased significantly to **$342 thousand** from **$22 thousand** in the prior year, primarily driven by service, rentals, and product sales, largely attributable to the Evoke acquisition[100](index=100&type=chunk)[141](index=141&type=chunk) Deferred Revenue (in thousands) | Item | Six months ended June 30, 2025 | | :------------------------------------ | :----------------------------- | | Deferred revenue - beginning of period | $13 | | Acquired in Evoke business combination | $252 | | Increases due to consideration received from customers | $283 | | Revenue recognized | ($222) | | **Deferred revenue - end of period** | **$326** | [NOTE 16: SEGMENT REPORTING](index=27&type=section&id=NOTE%2016:%20SEGMENT%20REPORTING) States that the company operates as a single reportable segment, with revenue primarily from North America - The Company operates as a single reportable segment, 'Firefly products,' managed on a consolidated basis, with revenue primarily derived from North America[101](index=101&type=chunk) - The Chief Executive Officer, as the chief operating decision maker, reviews financial information on a consolidated basis to allocate resources and evaluate performance[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operations, liquidity, and outlook, highlighting AI solutions, the Evoke acquisition, and capital activities [Overview](index=30&type=section&id=Overview) Introduces Firefly Neuroscience's AI-driven neuroscientific solutions and revenue generation strategies - Firefly Neuroscience is an AI technology company developing neuroscientific solutions, including FDA-510(k) cleared BNA™ (Brain Network Analytics) and the Evox System, to improve brain health outcomes for patients with mental illnesses and neurological disorders[109](index=109&type=chunk) - The company plans to generate revenue through product use by U.S. healthcare professionals and collaborations with pharmaceutical companies for neuroscience drug development, utilizing a base service fee plus per-use model for clinics[110](index=110&type=chunk) - The products aim to enhance neurological assessments by providing objective, data-driven insights into brainwave patterns, supporting personalized treatment plans and potentially transforming brain health management[109](index=109&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Recent Developments](index=32&type=section&id=Recent%20Developments) Highlights key corporate events, including recent capital raises, warrant exercises, and the Evoke acquisition - In **June 2025**, the Company issued and sold **400,000 Units** at **$3.00 per Unit**, raising **$1,200 thousand**, with each Unit comprising common stock or prefunded warrants, and two common stock purchase warrants (**$3.50** and **$4.00** exercise prices)[115](index=115&type=chunk) - On **April 30, 2025**, the Company acquired Evoke Neuroscience, Inc. for approximately **$6,000 thousand**, consisting of **$3,000 thousand** in cash and **857,142 shares** of common stock[116](index=116&type=chunk) - In **March 2025**, the Company issued and sold **547,737 Units** at **$3.00 per Unit**, including common stock or prefunded warrants and common stock purchase warrants, with associated finder's fees[117](index=117&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - During **February 2025**, the Company received **$8,825 thousand** from the exercise of warrants to purchase **823,530 shares** at **$6.83** and **800,000 shares** at **$4.00**[121](index=121&type=chunk) [Financial Operations Overview](index=34&type=section&id=Financial%20Operations%20Overview) Discusses revenue sources, cost of goods sold, and expected trends in operating expenses - Revenue sources include equipment sales, rentals, per-use fees, and clinical studies, with future plans to expand through healthcare professionals and pharmaceutical collaborations[122](index=122&type=chunk) - Cost of goods sold now includes product manufacturing expenses from the Evoke acquisition[123](index=123&type=chunk) - Research and development expenses are expected to increase with further product refinement and potential acquisitions/licensing, while general and administrative expenses are anticipated to rise due to public company operating costs[124](index=124&type=chunk)[126](index=126&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Compares financial performance across different periods, detailing revenue, expenses, and net loss [Comparison of the Three Months Ended June 30, 2025 and 2024](index=36&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) Analyzes financial performance for the three-month periods, highlighting changes in revenue, expenses, and net loss Three Months Ended June 30, 2025 vs 2024 (in thousands) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----- | :--- | :--------- | :--------- | | REVENUE | $299 | $10 | $289 | 2,891% | | COST OF GOODS SOLD | $25 | $- | $25 | N/A | | GROSS MARGIN | $274 | $10 | $264 | 2,640% | | Research and development expenses | $336 | $350 | ($14) | (4%) | | Selling and marketing expenses | $199 | $293 | ($94) | (32%) | | General and administration expenses | $1,373 | $626 | $747 | 119% | | OPERATING LOSS | ($1,634) | ($1,259) | ($375) | (30%) | | TOTAL OTHER INCOME (EXPENSES) | ($195) | ($5) | ($190) | 3,800% | | NET LOSS | ($1,833) | ($1,264) | ($569) | (45%) | - Revenue increased by **2,891%** to **$299 thousand**, primarily due to the Evoke Neuroscience acquisition[133](index=133&type=chunk) - General and administration expenses increased by **119%** to **$1,373 thousand**, mainly due to increased payroll and professional fees related to the Evoke acquisition and public company filings[137](index=137&type=chunk)[138](index=138&type=chunk) - Net loss widened by **45%** to **$1,833 thousand**, influenced by higher general and administration expenses and other expenses, including a settlement with a former consultant[132](index=132&type=chunk)[139](index=139&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=38&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Analyzes financial performance for the six-month periods, highlighting changes in revenue, expenses, and net loss Six Months Ended June 30, 2025 vs 2024 (in thousands) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------- | :------- | :--------- | :--------- | | REVENUE | $342 | $22 | $320 | 1,453% | | COST OF GOODS SOLD | $25 | $- | $25 | N/A | | GROSS MARGIN | $317 | $22 | $295 | 1,341% | | Research and development expenses | $648 | $639 | $9 | 1% | | Selling and marketing expenses | $407 | $542 | ($135) | (25%) | | General and administration expenses | $2,961 | $1,191 | $1,770 | 149% | | OPERATING LOSS | ($3,699) | ($2,350) | ($1,349) | (57%) | | TOTAL OTHER INCOME (EXPENSE) | ($11,060) | ($36) | ($11,024) | 30,622% | | NET LOSS | ($14,763) | ($2,386) | ($12,377) | 519% | - Revenue increased by **1,453%** to **$342 thousand**, primarily due to the Evoke Neuroscience acquisition[141](index=141&type=chunk) - General and administration expenses increased by **149%** to **$2,961 thousand**, driven by Evoke personnel, equity granted to employees, audit fees, and public company costs (investor relations, insurance, legal fees)[146](index=146&type=chunk) - Net loss significantly increased by **519%** to **$14,763 thousand**, mainly due to a substantial change in derivative fair value and loss on settlement of a promissory note[140](index=140&type=chunk)[147](index=147&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet short-term and long-term obligations, including cash flows and financing needs - The Company expects continued negative cash flows from operations for the next **12 months** due to investments in BNA Platform commercialization and Evoke integration[148](index=148&type=chunk) - Significant capital will be required for product development, commercialization, and distribution, with financing expected through equity sales, debt, or other sources[149](index=149&type=chunk) - An accumulated deficit of **$106,257 thousand** and negative operating cash flow of **$4,901 thousand** raise substantial doubt about the Company's ability to continue as a going concern[150](index=150&type=chunk) Cash Flows (Six Months Ended June 30, 2025 vs 2024, in thousands) | Cash Flow Activity (in thousands) | 2025 | 2024 | Change ($) | | :-------------------------------- | :--------- | :------- | :--------- | | Operating activities | ($4,901) | ($2,418) | ($2,483) | | Investing activities | ($2,379) | ($312) | ($2,067) | | Financing activities | $11,388 | $945 | $10,443 | - Net cash used in operating activities increased by **$2,483 thousand**, while net cash provided by financing activities increased by **$10,443 thousand**, primarily from warrant exercises and unit offerings[154](index=154&type=chunk)[157](index=157&type=chunk) [Recent Financings](index=42&type=section&id=Recent%20Financings) Details recent capital raising activities, including unit offerings and warrant exercises - The **June 2025** Units Offering raised **$1,200 thousand** through the sale of **400,000 Units**, each including common stock or prefunded warrants and two common stock purchase warrants[158](index=158&type=chunk) - The **March 2025** Units Offering involved the issuance of **547,737 Units** at **$3.00 per Unit**, consisting of common stock or prefunded warrants and common stock purchase warrants, with associated finder's fees paid to Canaccord Genuity Corp. and Research Capital Corporation[159](index=159&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - Warrant exercises in **February 2025** generated **$8,825 thousand** from the purchase of **823,530 shares** at **$6.83** and **800,000 shares** at **$4.00**[163](index=163&type=chunk) [Known Trends, Events, and Uncertainties](index=42&type=section&id=Known%20Trends,%20Events,%20and%20Uncertainties) Discusses factors that could impact future financial performance, including R&D, market adoption, and external risks - The Company faces inherent unpredictability in R&D, uncertainty of technology adoption, and the need to secure sufficient funding to support operations and achieve profitability[164](index=164&type=chunk)[165](index=165&type=chunk) - External factors such as public health crises, economic and trade policies, and geopolitical conflicts (e.g., Israel and Hamas war) could adversely impact business and market volatility[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No applicable quantitative and qualitative disclosures about market risk for the Company - The Company has no applicable quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were ineffective due to ITGCs and segregation of duties weaknesses - As of **June 30, 2025**, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective[168](index=168&type=chunk) - Management identified material weaknesses in internal control over financial reporting, specifically inadequate Information Technology General Controls (ITGCs) and a lack of segregation of duties[172](index=172&type=chunk)[173](index=173&type=chunk) - A remediation plan, initiated in **Q1 2025**, includes developing and enhancing ITGC processes and hiring/contracting additional resources to support financial reporting[174](index=174&type=chunk)[175](index=175&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings or claims are expected to have a material adverse effect on the company's operations or financial position - The Company is not aware of any currently pending litigation for which it believes the outcome could have a material adverse effect on its operations or financial position[177](index=177&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors, except for additional factors in the Form S-1 Registration Statement - There are no material changes from the risk factors previously disclosed in the Company's Registration Statement on Form S-1, except for newly added factors[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or common stock repurchases occurred during the three months ended June 30, 2025 - No unregistered sales of equity securities occurred during the three months ended **June 30, 2025**, beyond those already reported[180](index=180&type=chunk) - No repurchases of common stock were made during the three months ended **June 30, 2025**[181](index=181&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - There were no defaults upon senior securities[182](index=182&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[183](index=183&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No unreported Form 8-K information or Rule 10b5-1 trading plan adoptions/terminations by directors or officers - No information required for Form 8-K was left unreported during the three months ended **June 30, 2025**[184](index=184&type=chunk) - No directors or officers adopted or terminated a Rule 10b5-1 trading plan or arrangement during the fiscal quarter ended **June 30, 2025**[184](index=184&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including organizational documents, warrant forms, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, various forms of common stock purchase warrants, and Securities Purchase Agreements related to recent offerings and acquisitions[185](index=185&type=chunk) - Certifications of the Principal Executive Officer and Principal Financial and Accounting Officer, filed pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are included[185](index=185&type=chunk) [Signatures](index=49&type=section&id=Signatures) Report duly signed by the Chief Executive Officer and Chief Financial Officer of Firefly Neuroscience, Inc. on August 13, 2025 - The report is signed by Greg Lipschitz, Chief Executive Officer, and Paul Krzywicki, Chief Financial Officer, on **August 13, 2025**[190](index=190&type=chunk)

Core Insights - Firefly Neuroscience, Inc. is collaborating with Heidelberg University Hospital to study the neurophysiological impact of 15q13.3 copy number variants (CNVs) [1][3] - The study utilizes Firefly's FDA-cleared technology to analyze EEG data from 30 subjects, aiming to uncover insights into brain function related to rare genetic conditions [2][3] - The collaboration reflects a commitment to advancing precision neuroscience and aims to bridge the gap between genotype and phenotype for better patient care [3] Company Overview - Firefly is an AI company focused on improving brain health outcomes for patients with neurological and mental disorders, with a proprietary technology called Brain Network Analytics (BNA™) [7][8] - The company has built a comprehensive database of brain wave tests over the past 15 years and has achieved FDA clearance for its technology [7][8] - Firefly is targeting pharmaceutical companies and medical practitioners for the commercial launch of its BNA™ technology [7] Study Objectives - The study aims to identify electrophysiological biomarkers associated with 15q13.3 CNVs [6] - It will characterize neurocognitive profiles linked to deletions versus duplications of the chromosomal region [6] - The research supports future diagnostic and therapeutic strategies for neurodevelopmental disorders [6]

Core Points - Firefly Neuroscience, Inc. will be added to the Russell Microcap Index effective June 30, 2025, marking a significant milestone for the company since its Nasdaq listing less than a year ago [2][4] - The Russell indexes are utilized by investment managers and institutional investors, serving as benchmarks for approximately $10.6 trillion in assets as of June 2024 [3] - The CEO of Firefly highlighted the company's achievements in 2025, including the discovery of a cognitive brain age biomarker, acceptance into the NVIDIA Connect program, and expansion through the acquisition of Evoke Neuroscience [4] Company Overview - Firefly is an AI company focused on improving brain health outcomes for patients with neurological and mental disorders, utilizing its FDA-cleared Brain Network Analytics (BNA™) technology [5] - The BNA™ technology is designed to enhance diagnostic and treatment monitoring methods for conditions such as depression, dementia, anxiety disorders, concussions, and ADHD [5] - Firefly has developed its BNA™ using AI and machine learning on a proprietary database of over 17,000 patients, providing clinicians with insights into brain function to improve diagnosis and treatment [6]

Core Insights - Firefly Neuroscience, Inc. has made significant advancements in Alzheimer's research, focusing on differentiating between subjective cognitive decline (SCD), mild cognitive impairment (MCI), and dementia through accessible diagnostic methods [1][2] Group 1: Research Findings - The combination of EEG/ERP and volumetric magnetic resonance imaging (vMRI) provides the most accurate results for diagnosing cognitive impairments, achieving an accuracy of approximately 87% (AUC=0.87) when both methods are used together [2] - Key EEG measures identified include reaction time, commission errors, and P300b amplitude, which alone can categorize subjects with around 80% accuracy (AUC=0.79) [2] - The left temporal lobe size is a significant MRI predictor of cognitive issues, with smaller sizes correlating to higher cognitive impairment [2] Group 2: Company Developments - Firefly's recent acquisition of Evoke Neuroscience has enabled the integration of research teams to leverage a proprietary database of over 180,000 standardized EEG/ERP assessment records [3] - The company is working to link its breakthrough cognitive brain age biomarker with the findings from the recent study, aiming for a proactive approach to early screening and staging of Alzheimer's disease [3] - Firefly's FDA-cleared Brain Network Analytics (BNA™) technology is set to revolutionize diagnostic and treatment monitoring methods for various neurological and mental disorders [4][5] Group 3: Market Position and Strategy - Firefly targets pharmaceutical companies involved in drug research and clinical trials, as well as medical practitioners for clinical use of its BNA™ technology [4] - The company has built a comprehensive database of brain wave tests over the past 15 years, securing patent protection and achieving FDA clearance for its technologies [4][5]

Product Development and Launch - The BNA Platform has been developed using AI and includes a database of over 18,000 patients, focusing on twelve disorders[78] - The company plans to commercially launch the BNA Platform in 2025, with no expected material additional development costs[79] - The company aims to enhance patient outcomes through the BNA Platform by establishing objective baseline measurements of brain function[82] - The company expects to incur significant costs for at least two to four years to commercialize and distribute its flagship product, the BNA Platform[102] Financial Performance - Revenue for the three months ended March 31, 2025, was $43,000, compared to $12,000 for the same period in 2024, representing an increase of $31,000 or 258%[96] - Research and development expenses increased to $312,000 for the three months ended March 31, 2025, from $289,000 in 2024, an increase of $23,000 or 8%[97] - Selling and marketing expenses decreased to $208,000 in Q1 2025 from $249,000 in Q1 2024, a decrease of $41,000 or 16%[98] - General and administration expenses rose significantly to $1,588,000 in Q1 2025 from $565,000 in Q1 2024, an increase of $1,023,000 or 181%[99] - Other income (expense) for the three months ended March 31, 2025, was $(10,865,000), compared to $(31,000) in 2024, representing an increase in expenses of $10,834,000[100] - Net cash used in operating activities was $(2,511,000) for Q1 2025, compared to $(1,319,000) in Q1 2024, an increase of $1,192,000 or 90%[107] - Net cash provided from financing activities was $10,253,000 in Q1 2025, compared to $945,000 in Q1 2024, an increase of $9,308,000 or 985%[109] Acquisitions and Financing - On April 30, 2025, the company acquired Evoke Neuroscience, Inc. for approximately $6 million, consisting of $3 million in cash and 857,149 shares valued at $3.50 each[84] - The company acquired all outstanding stock of Evoke for approximately $6,000,000, consisting of $3,000,000 in cash and 857,142 shares of common stock[101] - The company has no committed source of financing and may not be able to raise funds as needed to continue operations[113] Operational Expenses - Research and development expenses are expected to continue to be the largest component of operating expenses as the company updates and maintains the BNA Platform[88] - Selling and marketing expenses include employee-related costs and consulting fees, which are expected to increase as the company expands its market presence[89] - General and administrative expenses will rise due to compliance with SEC and Nasdaq regulations, as well as other public company-related costs[90] Revenue Generation Strategy - Revenue generation will focus on two segments: use of the BNA Platform by neurologists in the U.S. and collaborations with pharmaceutical companies[87] Capital Raising Activities - A private placement agreement was entered into on March 28, 2025, to issue 547,737 units at a price of $3.00 per unit[86] - The company received total proceeds of $8.825 million from the exercise of warrants to purchase 1,623,530 shares of common stock[85]

Core Viewpoint - Firefly Neuroscience has made a significant acquisition of Evoke Neuroscience, aiming to enhance its brain health assessment capabilities through advanced technology and a proprietary database [1][2]. Acquisition Details - The acquisition involves a payment of $6 million, split equally between cash and Firefly's common stock, with a share price set at $3.50. Evoke's investors may receive a $500,000 performance bonus if Evoke achieves at least $3 million in annual revenue within three years [2]. - Post-acquisition, Firefly will gain access to over 180,000 standardized EEG/ERP assessment records, 27 authorized patents, and more than 60 commercial users [2]. Stock Performance - Following the announcement of joining NVIDIA's Connect program in February 2025, Firefly's stock surged over 170% on February 11, with a total increase of nearly 400% over three days [3]. Core Technology - Firefly's primary technology, the Brain Network Analysis (BNA™) system, utilizes advanced AI and a proprietary EEG database to provide comprehensive assessments of brain health, significantly impacting the diagnosis and monitoring of conditions like depression and dementia [5][6]. Database Development - The company has established a patented standardized high-definition longitudinal EEG database comprising over 17,000 patients across 12 diseases, including normal clinical patients [6]. Technology Application - BNA™ is integrated with FDA-approved EEG systems, offering clinicians detailed insights into brain function, enhancing their ability to diagnose mental and cognitive disorders accurately [8]. Commercialization Strategy - Firefly is commercializing BNA™, targeting pharmaceutical companies involved in drug research and clinical trials, as well as healthcare professionals [10]. Strategic Partnerships - In 2024, Firefly formed a strategic partnership with the Dallas Neurology Consultants (NCD) to incorporate BNA™ into patient workflows and conduct clinical research aimed at identifying biomarkers for predicting dementia [11]. - Firefly also announced a partnership with Zeto in September 2024 to integrate its BNA™ technology with Zeto's EEG platform, which is now used in over 200 hospitals and neurology departments in the U.S. [13][15]. Recent Developments - On October 15, 2024, Firefly's BNA™ biomarker discovery AI platform was approved to support Arrivo Bioventures in its exploratory study of a novel SIRT6 activator in healthy volunteers and patients with major depressive disorder [17]. - On October 16, 2024, Firefly announced a collaboration with Bright Minds Biosciences to analyze data from its first human Phase I study of a leading compound [17]. About Evoke Neuroscience - Founded in 2009, Evoke Neuroscience focuses on brain health assessment and cognitive function diagnostics, utilizing innovative EEG technology to track brain health over time [20]. - Evoke has developed EEG-based neuromodulation and neurofeedback systems that create personalized treatment plans based on patients' EEG data [22].

Core Insights - Firefly Neuroscience, Inc. has acquired Evoke Neuroscience, Inc., enhancing its proprietary database, intellectual property portfolio, and commercial footprint significantly [1][2] - The acquisition is expected to facilitate the development of a foundation model of the human brain using Firefly's FDA-cleared Brain Network Analytics (BNA™) technology [1][2] Company Overview - Firefly Neuroscience, Inc. (NASDAQ: AIFF) focuses on developing AI solutions aimed at improving brain health outcomes for patients with neurological and mental disorders [3] - The company has built a comprehensive database of brain wave tests and secured patent protection over the past 15 years, with its BNA™ technology revolutionizing diagnostic methods for various mental health conditions [3][4] Acquisition Details - The acquisition of Evoke Neuroscience will result in a more than two-fold increase in proprietary brain scans, a three-fold increase in patents, and a ten-fold increase in commercial sites [2] - The purchase terms include a total payment of $6 million, split 50% in cash and 50% in Firefly's common stock priced at $3.50 per share, along with a potential earn-out of $500,000 for Evoke's investors [4] Technological Synergies - The combined resources of Firefly and Evoke are expected to create significant technological, clinical, and commercial synergies, enhancing the capabilities of both companies [2] - Firefly's BNA™ technology, developed using AI and machine learning, utilizes a large proprietary database of standardized EEGs to provide comprehensive insights into brain function [4][5] Market Position - Firefly targets pharmaceutical companies involved in drug research and clinical trials, as well as medical practitioners for clinical use, positioning itself as a leader in brain health diagnostics [3][4]