NASDAQ: SMTI

Shift
in Strategy and Discontinuance of Value-Based Wound Care Program

Our
company’s main source of revenue has consistently been from soft tissue repair and bone fusion products for the surgical
market. Additionally, we generate a smaller portion of revenue from products sold in the post-acute setting. To further support this
segment, particularly in wound care, we launched a value-based care services initiative designed to enhance outcomes while
complementing our offerings in both surgical and post-acute markets. This post-acute strategy, which we referred to as Tissue Health
Plus (“THP”), was focused on providing value-based wound care services. Through THP, we planned to offer a first of its
kind value-based wound care program to payers and risk-bearing entities. This program was designed to enable payers to divest wound
care spend risk, reduce wound related hospitalizations and improve patient quality of life. To further develop our value-based care
strategy, we executed an investment and acquisition strategy to build telehealth services and acquire technologies to support the
THP platform.

Since
the second quarter of 2024, we managed our business on the basis of two operating and reportable segments: the Sanara Surgical segment
and the THP segment.

Our
intention in incubating THP was coupled with a goal to find an outside partner to buy or invest in the platform. Starting in 2024,
we held several meetings and did significant outreach to find potential funding for THP. This effort included meetings with venture
capital firms, strategic buyers, provider service companies, insurance companies and private equity firms. During the third quarter
of 2025, following authorization from our Board of Directors, management initiated a review of strategic options for THP and
formally engaged an investment bank to search for potential investors or purchasers. By mid-September 2025, we concluded that these
efforts were unlikely to succeed within the timeline allocated by the Board of Directors and ended our engagement with the
investment bank. Persistent losses related to THP and a lack of any firm commitments from potential investors led management and our
Board of Directors to decide to discontinue THP’s operations in mid-September 2025 and shift our focus exclusively on products
and technologies for use in the surgical market.

As
a result of this decision, THP met the accounting requirements to be classified under discontinued operations as of September 30, 2025.
In accordance with generally accepted accounting principles in the United States (“GAAP”), the operations of THP are presented
as discontinued operations in our Consolidated Balance Sheets and Consolidated Statements of Operations and, as such, have been excluded
from continuing operations for all periods presented. As a result of the disposal of THP, we now have a single reportable
segment. This determination is in accordance with Accounting Standards Codification 280, Segment Reporting.

Certain
prior period amounts have been reclassified to conform to the current year presentation.

Summary
of Our Key Products and Development Programs

market and distribute surgical products to surgeons at hospitals and surgical centers. Our products are primarily sold in the U.S. surgical
tissue repair market. We believe that we have the ability to drive our product pipeline from concept to preclinical and clinical development
while meeting quality and regulatory requirements.

CellerateRX
Surgical

CellerateRX
Surgical is a Type I bovine hydrolyzed collagen indicated for the management of surgical, traumatic, and partial and full-thickness wounds
as well as first- and second-degree burns. It is manufactured with a proprietary process. CellerateRX Surgical is sterilized, packaged
and designed specifically for use in the operating room. CellerateRX Surgical is primarily purchased by hospitals and ambulatory surgical
centers for use by surgeons to treat surgical wounds, including those associated with orthopedic, spine and trauma procedures. Additional
surgical wounds that often benefit from the use of CellerateRX Surgical include general, vascular, plastic/reconstructive, cardiovascular,
gynecologic, and urologic related procedures.

CellerateRX
Surgical is used in operative cases where patients might have trouble healing normally due to underlying health complications. There
is always a risk of complication with surgical wounds. This is especially true in patients with certain comorbidities, including obesity,
diabetes and hypertension. These complications can include surgical wound infections, dehiscence (where an incision opens after primary
closure) and necrosis. Surgeons use CellerateRX Surgical to complement the body’s normal healing process. By supporting the body
to heal normally without complications, improved patient outcomes are achieved, thereby reducing downstream costs related to complications
(such as re-operation, longer hospitalization, re-admittance, extended rehabilitative care and other additional treatments). Surgical
wound complications have become increasingly problematic due to the high rates of surgical patient comorbidities and the financial strain
on insurance payors as well as hospitals that suffer exorbitant costs for readmission of these patients within 90 days of surgery.

BIASURGE

BIASURGE
is a 510(k) cleared sterile no-rinse, advanced surgical solution used for wound irrigation. It contains an antimicrobial preservative
effective against a broad spectrum of pathogenic microorganisms in the solution. BIASURGE is indicated for use in the mechanical cleansing
and removal of debris, including microorganisms, from surgical wounds.

Other
Products

TEXAGEN
Amniotic Membrane Allograft is a multi-layer amniotic membrane allograft used as an anatomical barrier with robust handling that can
be sutured for securement if needed.

BiFORM
is an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site. It can be hydrated and used as
a strip or molded into a putty to fill a bone defect.

ACTIGEN
Verified Inductive Bone Matrix is a naturally derived, differentiated allograft matrix with robust handling properties.

ALLOCYTE
Plus is a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable bone fibers. These viable cellular
allografts are ready to use upon thawing and have fibrous handling properties.

FORTIFY
TRG Tissue Repair Graft (“FORTIFY TRG”) is a freeze-dried, multi-layer small intestinal submucosa extracellular matrix sheet.
The graft is 510(k) cleared for implantation to reinforce soft tissue, is terminally sterilized, has a thin profile, is available in
multiple sizes, and can be cut to size to accommodate the patient’s anatomy. FORTIFY TRG is provided sterile and can be hydrated
with autologous blood fluid.

Our
product portfolio includes other products that have an insignificant impact on our revenue at this time.

Tufts
University License Agreement

On
December 20, 2023, we signed an exclusive license agreement with Tufts University (“Tufts”) to develop and commercialize
patented technology covering 18 unique collagen peptides. As part of this agreement, we formed a new subsidiary, Sanara Collagen Peptides,
LLC (“SCP”), and issued 10% of SCP’s outstanding units to Tufts. SCP has exclusive rights to develop and commercialize
new products based on the licensed patents and patents pending. SCP will pay royalties to Tufts based on net sales of licensed products
and technologies. Under the exclusive license agreement, royalties will be calculated at a rate of 1.5% or 3%, depending on the type
of product or technology developed. SCP will pay Tufts a minimum annual royalty of $50,000 on January 1 of the year following the first
anniversary of the first commercial sale of the licensed products or technologies. SCP will pay Tufts a $100,000 minimum annual royalty
on January 1 of each subsequent year during the royalty term specified in the exclusive license agreement. There have been no material
accounting impacts and no royalties paid related to this arrangement as of December 31, 2025.

connection with the shift in strategy discussed above, we are in the process of terminating the exclusive license agreement with
Tufts and dissolving SCP in order to focus on developing and commercializing our surgical product portfolio.

Strategy

Our
mission is to develop and commercialize transformative technologies to improve clinical outcomes and reduce healthcare expenditures in
the surgical market. Within this mission, we strive to:

●
Deliver surgical solutions that matter for every customer and every procedure. We plan to do this through a strong commitment
to each of our stakeholders. For patients, we are focused on providing solutions that support the body’s natural healing process
and help reduce complications, enabling better recovery. For surgeons, we are focused on offering clinically proven tools designed to
address real surgical challenges, so they can perform at their best for each patient they serve. For healthcare systems, we are focused
on delivering evidence-based products that improve outcomes and help reduce complications, positioning healthcare systems to achieve
quality metrics, control costs, and elevate care across networks. For distributor partners, we are focused on providing a broad portfolio
of efficacious products, empowering their teams to present solutions to surgeons and ultimately improving clinical outcomes for the patients
they support.

●
Drive additional market penetration as well as geographic expansion for our products. We are actively working to expand our geographic
footprint across the entire United States. We also intend to leverage our comprehensive product portfolio and relationships with key
constituents to deepen our presence in the surgical markets. We believe the breadth and flexibility of the products we offer allow us
to address a wide variety of surgical site needs, wound types and sizes and offer significant new opportunities for sales growth. In
addition, we believe that as we continue to offer new products, our salesforce’s ability to reach additional customers in new and
existing geographic regions, while also penetrating further in existing customer accounts, will be enhanced.

●
Let “Prepare, Promote and Protect” continue to guide our approach to surgical care. Our product portfolio strategy
“Prepare, Promote and Protect” is the basis for our existing portfolio of surgical solutions, product development initiatives
and related partnerships. Our products aid in the preparation of procedures and help reduce complications, most notably our mechanical
cleansing solution, BIASURGE. Our products promote soft tissue and bone repair, including our orthobiologic products such as BiFORM,
ACTIGEN, and ALLOCYTE Plus. Our products protect the surgical wound environment, including CellerateRX Surgical, which utilizes hydrolyzed
collagen technology to support wound healing and tissue repair and has been clinically shown to reduce complications.

●
Launch new innovative products. We have partnered with Biomimetic Innovations Limited to commercialize additional products
such as OsStic BioAdhesive, the first true bioadhesive for advanced fixation, which is estimated to be introduced to the U.S. commercial
market in the first quarter of 2027. We expect products like OsStic BioAdhesive to deepen our portfolio of technologies that improve
surgical site outcomes. We are focused on offering additional products that are more efficacious than competing products and provide
a stronger value proposition (e.g., lower total cost to heal and less time to heal, leading to reduced healthcare system costs).

Competitive
Strengths

●
Differentiated surgical technologies. We believe our products address key challenges, facilitate improved outcomes, and reduce
overall costs. We offer products that specifically address common surgical site complications. We believe our products facilitate improved
outcomes for patients and lower the overall cost of care.

●
Proven commercial strategy. We believe we have a proven commercial strategy and scalable model with multiple drivers to facilitate
strong growth. Our commercial distribution network has delivered strong results, achieved significant commercial scale and demonstrated
operating leverage. As of the end of 2025, our team has secured product contracts with more than 4,000 hospitals and engaged surgeons
in key specialties across the United States.

●
Pipeline of innovative products. We have a pipeline of compelling surgical products. We believe the efficacy of our products will
be demonstrated via clinical and health economic outcomes data, facilitating their expanded adoption, while lowering the overall cost
of treatment for healthcare systems and payors.

●
Experienced senior leadership team with a multi-year track record of execution in the surgical market. We are led by a dedicated
and seasoned senior leadership team with significant industry experience who have successfully executed our strategy in the surgical
market to date by introducing and commercializing multiple products and technologies through investment in new areas of growth. We believe
our leadership team has the vision, experience, and expertise required to guide and successfully implement our future growth strategy.

Research,
Clinical and Economic Evaluation

Our
portfolio continues to gain validation as a clinically effective and economic value solution for the management of surgical wounds. Building
on the evidence, new research published during the most recent twelve months has strengthened our
preclinical, clinical and health economic data.

Preclinical
and Translational Research

CellerateRX
Surgical continues to demonstrate efficacy and safety across a range of challenging wound types and patient populations, as
supported by both preclinical and clinical research. The in vitro studies have demonstrated the differentiated effects of
CellerateRX Surgical on mammalian cells compared to competitor products, supporting the growing body of evidence pertaining to the
bioactivity of the product and individual hydrolyzed collagen peptide components, beyond what is currently reported in the general
literature. In animal model studies conducted by multiple academic institutions, CellerateRX Surgical demonstrated contribution to
the proper wound healing environment, supporting resolution of local inflammation, improvement in tissue perfusion, accelerated
wound closure and increased breaking strength of repaired skin. This translational research aligns with previously published
scientific research and clinical literature, furthering the mechanistic contributions of hydrolyzed collagen in optimizing the
surgical wound healing environment. Ongoing research continues to explore the unique benefits of hydrolyzed collagen in the quality
of surgical wound tissue supported care.

November 2025, additional preclinical research on BIASURGE was published in The Journal of Arthroplasty, titled “The in vitro
Performance of Surgical Irrigation Solutions in Preventing Biofilm Formation on Implants.” In this comparative, in vitro
study, the use of BIASURGE demonstrated statistical significance and meaningful prevention of biofilm formation compared to saline controls
and competitive comparators across common orthopedic implant surfaces: stainless steel, titanium, cobalt-chrome and polyethylene. At
clinically relevant two-minute exposure times, BIASURGE exhibited high antimicrobial efficacy with low cytotoxicity, supporting fibroblast
recovery above standard biocompatibility thresholds. By contrast, benzalkonium chloride solutions exhibited persistent cytotoxic effects.
These results highlight BIASURGE’s potential as a clinically preferred irrigation solution for reducing implant-associated infection
risk without compromising cell viability.

Together,
the CellerateRX Surgical and BIASURGE preclinical findings express our commitment to biologically active and safe technologies
that address both infection control and quality wound repair in surgical environments.

Clinical
Research and Outcomes

addition to preclinical findings, multiple peer-reviewed studies have been published over the past year evaluating CellerateRX Surgical
in various surgical procedures and expanding and corroborating previous studies.

For
example, recent research includes a study titled “Adjuvant Hydrolyzed Collagen Powder in High-Risk Patients with Large Soft-Tissue
Defects Undergoing Orthoplastic Limb Preservation Surgery,” which demonstrated that the adjunctive use of CellerateRX Surgical
in combination with reconstructive flap and graft procedures supported consistent wound closure and enhanced granulation in patients
with extensive limb injuries and compromised healing cascades. Treatment with adjunctive hydrolyzed collagen promoted earlier graft take,
resulting in improved limb preservation and reduced infection outcomes. Another publication, “A Novel Approach to
Vulvectomy Care: The Role of Hydrolyzed Collagen Surgical Powder,” evaluated hydrolyzed collagen as an adjunctive
therapy in complex vulvectomy surgical wound management. Patients treated with CellerateRX Surgical exhibited improved epithelialization,
reduced exudate and fewer dressing changes compared with historical care models, illustrating the benefit of CellerateRX Surgical in
facilitating healing within moist, high-shear environments.

A
2025 retrospective case series titled “Intraoperative Use of Hydrolyzed Collagen Powder in Morbidly Obese Patients
Undergoing Direct Anterior Approach Total Hip Arthroplasty” evaluated the application of CellerateRX Surgical during
anterior hip replacement in patients with a preoperative body mass index (BMI) >40 kg/m², a group recognized as being
at markedly increased risk for wound complications and infection. In this series, hydrolyzed collagen was applied intraoperatively
to the fascial plane prior to skin closure. In all four patients, complete wound healing was achieved without dehiscence, seroma
or infection within three months post-procedure. The intraoperative CellerateRX Surgical placement was safe, synergistic with
the surgical procedure and effective in eliminating dead space and enhancing closure quality. Collectively, these case series data
support reduced superficial wound complications and periprosthetic joint infection risk in high-risk arthroplasty patients. In a
cross-specialty evaluation, a study titled “Evaluation of CellerateRX Utility in Reducing Groin Complications after Femoral
Exposure” examined outcomes in high-risk vascular surgery patients and found that use of CellerateRX Surgical was
associated with a notable reduction in groin wound complications and dehiscence compared with standard care, confirming earlier
evidence of decreased infection rates and improved tissue integrity.

Collectively,
these studies reinforce the expanding clinical applicability of our hydrolyzed collagen technology, CellerateRX Surgical,
across orthopedic, reconstructive, plastic, vascular and general surgical specialties. Consistent findings of improved wound closure,
reduced complication rates and quality of tissue repair demonstrate the broad therapeutic application of CellerateRX Surgical as a bioactive
adjunct for surgical wound management. These new data bolster previously published findings in spinal (Dickerman, 2017; Hotchkiss, 2021;
Gitelman, 2022) and broad elective surgical specialties (Nowrouzi, 2023) demonstrating reduced surgical site infections, enhanced wound
strength and measurable cost savings, strengthening the multi-year evidence compendium supporting CellerateRX Surgical as a value-enhancing
solution.

ALLOCYTE Plus
was featured in a long-term clinical study published in the Journal of Spine & Neurosurgery (Dorchak and Burkus, 2025).
This study evaluated outcomes of lumbar spinal fusions using a cryopreserved viable cellular bone allograft as a standalone graft substitute.
Ten patients followed for 24-36 months demonstrated universal radiographic fusion by six months post-operation, with
sustained improvements in neurological and clinical outcomes at final follow-up. No complications, graft failures or revision surgeries
were reported. The advanced cryopreservation technology preserved high cell viability (~92%) without dimethyl sulfoxide, maintaining
viable mesenchymal stem cells and osteoprogenitor populations capable of osteogenesis. These findings indicate that ALLOCYTE Plus
provides a safe, biologically active alternative to autogenous iliac crest bone grafts, eliminating donor-site morbidity while achieving
durable arthrodesis outcomes.

Economic
and Clinical Value

March 2026, we announced the publication of a peer-reviewed health economic study in the Journal of Medical Economics
titled “Evaluating the Economic and Clinical Value of CellerateRX Surgical Powder in the Management
of Spine Surgery Wounds.” The study evaluated the cost-effectiveness of CellerateRX Surgical as an adjunct
to standard of care for managing acute spinal surgery wounds in high-risk patient populations. Using published clinical data, researchers
modeled postoperative complications, hospital readmissions and surgical revision procedures over a one-year period. Clinical efficacy
was measured in quality-adjusted life years (“QALY”), and direct medical costs were assessed in 2025 U.S. dollars.
Results demonstrated that CellerateRX Surgical achieved a dominant cost-effectiveness profile compared to standard care alone, yielding
improved outcomes at reduced costs. Specifically, CellerateRX Surgical averaged a cost savings of $3,852 per patient,
a QALY gain of 0.007 and a net monetary benefit of $4,542. The primary contributors to cost reductions were decreases
in readmissions and revision procedures, which accounted for approximately $2,238 and $835 of the total
savings, respectively. Furthermore, CellerateRX Surgical maintained economic dominance in more than 99% of clinical variability
simulations. Researchers concluded that integrating CellerateRX Surgical into standard wound management protocols for high-risk spinal
surgery patients enhances both clinical outcomes and cost efficiency, reinforcing its role as a value-driven component of the perioperative
care surgical bundle.

Building
upon this scientific foundation, we plan to advance prospective multicenter studies and translational research to further validate
the real-world performance of our current and future portfolio technologies, further aligning our mission to
improve surgical outcomes and reduce healthcare expenditures.

Intellectual
Property

Since
our acquisition of assets from Rochal Industries, LLC (“Rochal”) in July 2021, and our acquisition of assets from The Hymed
Group Corporation (“Hymed”) and Applied Nutritionals, LLC (“Applied”) in August 2023 (the “Applied Asset
Purchase”), our research and development activities have included internally developing additional proprietary products for the
surgical market and actively working with third-party research and development partners. For our internally developed products, we seek
patent protection for our inventions to protect and differentiate our products and establish a defense against third-party infringement
claims. With the aim of optimizing commercial and regulatory success, our proprietary technology and innovative applications thereof
are protected by product, system, process and method-of-use patent claims. We believe that our granted patents and pending applications
collectively protect our internally developed intellectual property, both in terms of our existing products, as well as our anticipated
pipeline of new offerings.

July 2021, we acquired certain assets from Rochal, including intellectual property. With respect to the assets we acquired from Rochal
and products developed following the Rochal acquisition, our patent portfolio includes, among others, 11 issued U.S. patents, including
U.S. Patent No. 8,829,053 entitled “Biocidal Compositions and Methods of Using the Same” expiring December 7, 2031 (foreign
patents expiring December 6, 2032) and supported by an additional U.S. patent expiring June 20, 2041 relating to BIASURGE Surgical Irrigation,
BIAKŌS Antimicrobial Skin & Wound Cleanser and BIAKŌS Antimicrobial Wound Gel, as well as over 200 issued patents in
foreign jurisdictions. Following the Applied Asset Purchase in August 2023, our portfolio also now includes, among others, ten additional
U.S. patent applications, five trademarks, four 510(k) clearances and various domain names.

2024, our research and development team submitted 11 provisional patent applications covering innovations in proprietary antimicrobial
technologies and hydrolyzed collagen technologies. These applications encompass novel product formats and target a range of treatment
applications. Key advancements include unique collagen formulations designed to enhance antimicrobial efficacy and optimize healing outcomes
across diverse medical indications. In 2025, these 11 provisional patent applications were converted into non-provisional filings, with
corresponding U.S. and PCT applications submitted, and as of the date of this report, all applications are pending. An additional three
provisional patents were filed in 2025, further expanding the breadth of intellectual property protection and indicating our future platform
development efforts.

Our
pending patent applications and new filings are representative of our ongoing efforts to broaden our portfolio as we continue developing
new products focused on the surgical market. We intend to defend our intellectual property as we believe necessary by actively pursuing
any infringements. Additionally, we are focused on continuing to develop our portfolio of patents, brands and trademarks, pursuing any
incremental commercial opportunities that our patents provide and pursuing patents for new products as they are developed.

Sales
and Marketing

As
of December 31, 2025, we employed 40 U.S. based field sales representatives. Our field sales representatives are recruited based on their
extensive industry experience and professional performance. We constantly evaluate new markets and opportunities to add to our sales
teams.

Our
surgical products are sold through a growing network of surgical specialty distributors and Company representatives who are credentialed
to demonstrate the products in surgical settings. Field sales representatives are initially trained through an internal learning management
system, “SanaraU,” which gives them further product and surgical specialty training, including wound etiology, operating
room etiquette and credentialing requirements. After completing their internal training, newly hired field sales representatives participate
in field training with our experienced field sales representatives in order to obtain real world training and gain additional insights
into best practices. The initial training period lasts approximately eight weeks. Field sales representatives are supported by regularly
updated training modules on product information and best practices.

A
key component of our sales efforts involves working with physicians and clinicians to champion our products in their facilities. We work
closely with surgeons and health system stakeholders to demonstrate the efficacy and beneficial impact of our surgical products and successfully
navigate the hospital value analysis committee approval process, allowing our products to be sold in those facilities. If our sales efforts
are successful, the clinicians then advocate for the use of our products when medically necessary.

Manufacturing,
Supply and Production

do not own or operate our own manufacturing facilities. We rely on contract manufacturers to supply our products. Our contract manufacturing
strategy is intended to drive cost leverage through scale and avoid high capital outlays and fixed costs associated with constructing
and operating manufacturing facilities. Our manufacturing partners have internal compliance processes to maintain the high quality and
reliability of our products.

Reimbursement,
Clinical Validation and Clinical Utility

Our
products are not subject to reimbursement risk and are all sold as Diagnosis Related Group products within the operating room suite. Our strategy is focused on continued innovation and the development
of clinical evidence to validate clinical utility of our products, including clinical data, real-world evidence and health economic analyses
intended to demonstrate product performance, clinical relevance and economic value to patients and the totality of the healthcare system.
The data that must be gathered for decision support is directed by third-party payors and government regulators.

Competition

surgical wound care market is served by several large, multi-product line companies as well as a number of small companies. Our products
compete with surgical wound irrigation products and biomaterial products. Manufacturers and distributors of competitive products include
Medline Industries, Inc., Irrimax Corporation, Becton Dickinson and Company, Solventum, Integra LifeSciences Holdings Corporation and
numerous others. Many of our competitors are significantly larger than we are and have greater financial and personnel resources.

Government
Regulation

Our
operations are subject to comprehensive federal, state and local laws and regulations in the jurisdictions in which we or our research
and development partners or affiliates do business. The laws and regulations governing our business and interpretations of those laws
and regulations are subject to frequent change. Our ability to operate profitably will depend in part upon our ability, and that of our
research and development partners and affiliates, to operate in compliance with applicable laws and regulations. The laws and regulations
relating to medical products that apply to our business and that of our partners and affiliates continue to evolve, and we must, therefore,
devote significant resources to monitoring developments in legislation, enforcement, and regulation in such areas. As the applicable
laws and regulations change, we are likely to make conforming modifications in our business processes from time to time. We cannot provide
assurance that a review of our business by courts or regulatory authorities will not result in determinations that could adversely affect
our operations or that the regulatory environment will not change in a way that restricts our operations.

U.S.
Food and Drug Administration Regulation

Our
medical products and operations are regulated by the U.S. Food and Drug Administration (the “FDA”) and other federal and
state agencies. Most of the products we currently market are regulated as medical devices in the United States under the Federal Food,
Drug, and Cosmetic Act (“FDCA”), as implemented and enforced by the FDA. The FDA regulates the development, testing, manufacturing,
labeling, packaging, storage, installation, servicing, advertising, promotion, marketing, distribution, import, export and market surveillance
of our medical devices.

addition, we market certain products for use in surgical wound care regulated by the FDA under Section 361 of the Public Health Service
Act (“PHSA”) (42 U.S.C. § 264) and 21 C.F.R. Part 1271.

Device
Premarket Regulatory Requirements

Before
being introduced into the U.S. market, each medical device must obtain marketing clearance from the FDA through the 510(k) premarket
notification process, the de novo classification process (summarized below), or the premarket approval application
(“PMA”) process, unless they are determined to be Class I devices or to otherwise qualify for an exemption from one of
these available forms of premarket review and authorization by the FDA. Under the FDCA, medical devices are classified into one of
three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the
extent of control needed to provide reasonable assurance of safety and effectiveness. Classification of a device is important
because the class to which a device is assigned determines, among other things, the necessity and type of FDA review required prior
to marketing the device. Class I devices are those for which reasonable assurance of safety and effectiveness can be assured by
adherence to general controls that include compliance with the applicable portions of the FDA’s Quality Management System
Regulation (“QMSR”), as well as regulations requiring facility registration and product listing, reporting of adverse
medical events, and appropriate, truthful and non-misleading labeling, advertising and promotional materials. The Class I
designation also applies to devices for which there is insufficient information to determine that general controls are sufficient to
provide reasonable assurance of the safety and effectiveness of the device or to establish special controls to provide such
assurance, but that are not life-supporting or life-sustaining or for a use which is of substantial importance in preventing
impairment of human health, and that do not present a potential unreasonable risk of illness or injury.

Class
II devices are those for which general controls alone are insufficient to provide reasonable assurance of safety and effectiveness and
there is sufficient information to establish “special controls.” These special controls can include performance standards,
post-market surveillance requirements, patient registries and FDA guidance documents describing device-specific special controls. While
most Class I devices are exempt from the 510(k) premarket notification requirement, most Class II devices require a 510(k) premarket
notification prior to commercialization in the United States; however, the FDA has the authority to exempt Class II devices from the
510(k) premarket notification requirement under certain circumstances. As a result, manufacturers of most Class II devices must submit
510(k) premarket notifications to the FDA under Section 510(k) of the FDCA (21 U.S.C. § 360(k)) in order to obtain the necessary
clearance to market or commercially distribute such devices. To obtain 510(k) clearance, manufacturers must submit to the FDA adequate
information demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market.
A predicate device is a legally marketed device that is not subject to PMA, meaning, (i) a device that was legally marketed prior to
May 28, 1976 (“preamendment device”) and for which a PMA is not required, (ii) a device that has been reclassified from Class
III to Class II or I, or (iii) a device that was found substantially equivalent through the 510(k) process. If the FDA agrees that the
device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market
the device. If there is no adequate predicate to which the manufacturer can compare its proposed device, the proposed device is automatically
classified as a Class III device. In such cases, the device manufacturer must then fulfill the more rigorous PMA requirements or can
request a risk-based classification determination for the device in accordance with the de novo classification process.

de novo classification process allows a manufacturer whose novel device is automatically classified into Class III to request
down-classification of its device to Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring
the submission and approval of a PMA. Under the Food and Drug Administration Safety and Innovation Act of 2012 (“FDASIA”),
the FDA is required to classify a device within 120 days following receipt of the de novo classification request. If the manufacturer
seeks reclassification into Class II, the classification request must include a draft proposal for special controls that are necessary
to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the classification request
if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low
to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed.

Devices
that are intended to be life sustaining or life supporting, devices that are implantable, devices that present a potential unreasonable
risk of harm or are of substantial importance in preventing impairment of health and devices that are not substantially equivalent to
a predicate device are placed in Class III and generally require FDA approval through the PMA process, unless the device is a preamendment
device not yet subject to a regulation requiring premarket approval. The PMA process is more demanding than the 510(k) premarket notification
process. For a PMA, the manufacturer must demonstrate through extensive data, including data from preclinical studies and clinical trials,
that the device is safe and effective. The PMA must also contain a full description of the device and its components, a full description
of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines
whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application for review, it has
180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer,
and can take up to several years. Before approving a PMA, the FDA generally also performs an on-site inspection of manufacturing facilities
for the product to ensure compliance with the QMSR.

Clinical
trials are almost always required to support PMAs and are sometimes required to support 510(k) submissions. All clinical investigations
of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption
(“IDE”) regulations that govern investigational device labeling, prohibit promotion of the investigational device and specify
recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant
risk,” as defined by the FDA, the agency requires the device sponsor to submit an IDE application to the FDA, which must become
effective prior to commencing human clinical trials. The IDE will automatically become effective 30 days after receipt by the FDA, unless
the FDA denies the application or notifies the company that the investigation is on hold and may not begin until the sponsor provides
supplemental information about the investigation that satisfies the FDA’s concerns. If the FDA determines that there are deficiencies
or other concerns with an IDE that require modification of the study, the FDA may permit a clinical trial to proceed under a conditional
approval. In addition, the study must be approved by, and conducted under the oversight of, an institutional review board (“IRB”),
for each clinical site. If the device presents a non-significant risk to the patient according to criteria established by the FDA as
part of the IDE regulations, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without
separate authorization from the FDA, but must still comply with abbreviated IDE requirements, such as monitoring the investigation, ensuring
that the investigators obtain informed consent, and labeling and record-keeping requirements.

Device
Postmarket Regulatory Requirements

After
a device is cleared or approved for commercialization, and prior to marketing, numerous regulatory requirements apply to the various
entities responsible for preparing a device for distribution, including the manufacturer (including specification developer), contract
manufacturers, relabelers/repackagers, sterilizers and initial importer, as applicable. These include:

● establishment
registration and device listing;

● development
of a quality management system, including establishing and implementing procedures to design
and manufacture devices in compliance with the QMSR (unless a device category is exempt from
this requirement by the FDA, such as in the case of many Class I devices);

● labeling
regulations that prohibit the promotion of products for uncleared or unapproved uses (known
as off-label uses), as well as requirements to provide accurate and non-misleading information
and adequate information on both risks and benefits of the device;

● the
FDA’s unique device identification requirements that call for a unique device identifier on device labels, packages, and in
some cases, on the device itself, and submission of data to the FDA’s Global Unique Device Identification
Database;

● medical
device reporting regulations that require manufacturers to report to the FDA if a device
may have caused or contributed to a death or serious injury or malfunctioned in a way that
would likely cause or contribute to a death or serious injury if it were to recur;

● corrections
and removal reporting regulations that require manufacturers report to the FDA field corrections
and product recalls or removals if undertaken to reduce a risk to health posed by the device
or to remedy a violation of the FDCA that may present a risk to health; and

● postmarket
surveillance regulations, which apply to Class II or Class III devices if the FDA has issued
a postmarket surveillance order and the failure of the device would be reasonably likely
to have serious adverse health consequences, the device is expected to have significant use
in the pediatric population, the device is intended to be implanted in the human body for
more than one year, or the device is intended to be used to support or sustain life and to
be used outside a user facility.

and our research and development partners and contract manufacturers are subject to periodic scheduled or unscheduled inspections by
the FDA. If the FDA believes we or any of our research and development partners or contract manufacturers are not in compliance with
the QMSR, or other postmarket requirements, it has broad authority to take significant enforcement actions to compel compliance. Specifically,
if the FDA determines that we or our research and development partners or contract manufacturers failed to comply with applicable regulatory
requirements, the agency can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

● untitled
letters, warning letters, fines, injunctions, consent decrees and civil penalties;

● customer
notifications or repair, replacement or refunds;

● mandatory
recalls, withdrawals, or administrative detention or seizure of our products;

● operating
restrictions or partial suspension or total shutdown of production;

● refusing
or delaying requests for 510(k) marketing clearance or approval of premarket approval applications
relating to new products or modified products;

● reclassifying
a 510(k) cleared device or withdrawing PMA approval;

● refusal
to grant export approvals for our products; or

● pursuing
criminal prosecution.

Any
such enforcement action by the FDA would have a material adverse effect on our business. In addition, these regulatory controls, as well
as any changes in FDA policies, can affect the time and costs associated with the development, introduction, and continued availability
of new products.

HCT/P
Regulatory Requirements

Some
of the products we currently market are regulated as biologics, more specifically as human cells, tissues, and cellular and
tissue-based products (“HCT/Ps”). They include (i) TEXAGEN, (ii) ACTIGEN, and (iii) ALLOCYTE Plus. HCT/Ps are regulated
by the FDA’s Center for Biologics Evaluation and Research (“CBER”) or Center for Devices and Radiological Health
(“CDRH”) depending on the type of product, how it is manufactured and its intended uses. HCT/Ps that meet all of the
criteria described in 21 C.F.R. § 1271.10(a) are regulated by the CBER under Section 361 of the PHSA (42 U.S.C. § 264) and
21 C.F.R. Part 1271 only (“361 Products”). Although 361 Products do not require premarket review by the FDA prior to
commercialization, manufacturers of 361 Products must register with the FDA, submit a list of HCT/Ps manufactured, and comply with
donor eligibility requirements and current good tissue practices (“cGTP”), among other things.

Federal
Trade Commission Regulatory Oversight

Our
advertising for our products is subject to federal truth-in-advertising laws enforced by the Federal Trade Commission (the “FTC”),
as well as comparable state consumer protection laws. Under the Federal Trade Commission Act (“FTC Act”), the FTC is empowered,
among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce;
(b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations
relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement
authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative
or judicial penalties, including civil penalties, injunctions affecting the manner in which we would be able to market products in the
future, or criminal prosecution.

Fraud
and Abuse and Transparency Laws and Regulations

Our
business activities (and the business activities of our research and development partners and affiliates), including, but not limited
to, research, sales, promotion, distribution and medical education, are subject to regulation by numerous federal and state regulatory
and law enforcement authorities in the United States, including the Department of Justice, the Department of Health and Human Services
and its various divisions, the Centers for Medicare and Medicaid Services, the Health Resources and Services Administration, the Department of Veterans Affairs, the Department
of Defense, and state and local governments. Our business activities must comply with numerous healthcare laws, including, but not limited
to, anti-kickback and false claims laws and regulations as well as data privacy and security laws and regulations, which are described
below.

federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting,
or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing,
leasing, ordering, or arranging for or recommending the purchase, lease, furnishing, or order of any item or service reimbursable under
Medicare, Medicaid, or other federal healthcare programs, in whole or in part. The term “remuneration” has been interpreted
broadly to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical
manufacturers on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other. There are certain statutory
exceptions and regulatory safe harbors protecting some common activities from prosecution. The exceptions and safe harbors are drawn
narrowly, and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases, or recommendations
may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular
applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead,
the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.
Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration
is to induce referrals of federal healthcare covered business, the statute has been violated. The Patient Protection and Affordable Care
Act, of 2010, as amended (the “ACA”), modified the intent requirement under the Anti-Kickback Statute to a stricter standard,
such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have
committed a violation. In addition, the ACA also provided that a violation of the federal Anti-Kickback Statute is grounds for the government
or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent
claim for purposes of the federal civil False Claims Act (the “FCA”). The ACA further created new federal requirements for
reporting, by applicable manufacturers of covered drugs, payments and other transfers of value to physicians and teaching hospitals,
and ownership and investment interests held by physicians and other healthcare providers and their immediate family members.

federal civil FCA, prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false
or fraudulent claim for payment to, or approval by, the federal government, knowingly making, using, or causing to be made or used a
false record or statement material to a false or fraudulent claim to the federal government, or avoiding, decreasing, or concealing an
obligation to pay money to the federal government. A claim includes “any request or demand” for money or property presented
to the U.S. government. The civil FCA has been used to assert liability on the basis of kickbacks and other improper referrals, improperly
reported government pricing metrics such as Best Price or Average Manufacturer Price, or submission of inaccurate information required
by government contracts, improper use of Medicare provider or supplier numbers when detailing a provider of services, improper promotion
of off-label uses not expressly approved by the FDA in a drug’s label, and allegations as to misrepresentations with respect to
the products supplied or services rendered. Several pharmaceutical and other healthcare companies have further been sued under these
laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
Intent to deceive is not required to establish liability under the civil FCA; however, a change in Department of Justice policy now prohibits
enforcement actions for knowing violations of law based on noncompliance with agency subregulatory guidance. Civil FCA actions may be
brought by the government or may be brought by private individuals on behalf of the government, called “qui tam” actions.
If the government decides to intervene in a qui tam action and prevails in the lawsuit, the individual will share in the proceeds from
any fines or settlement funds. If the government declines to intervene, the individual may pursue the case alone. Since 2004, these FCA
lawsuits against pharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil and
criminal settlements, as much as $3.0 billion, regarding certain sales practices and promoting off-label drug uses. Civil FCA liability
may be imposed for Medicare or Medicaid overpayments, for example, overpayments caused by understated rebate amounts, that are not refunded
within 60 days of discovering the overpayment, even if the overpayment was not caused by a false or fraudulent act.

government may further prosecute conduct constituting a false claim under the criminal FCA. The criminal FCA prohibits the making or
presenting of a claim to the government knowing such claim to be false, fictitious, or fraudulent and, unlike the civil FCA, requires
proof of intent to submit a false claim. The civil monetary penalties statute is another potential statute under which drug and device
companies may be subject to enforcement. Among other things, the civil monetary penalties statute imposes fines against any person who
is determined to have presented, or caused to be presented, claims to a federal healthcare program that the person knows, or should know,
is for an item or service that was not provided as claimed or is false or fraudulent.

Health Insurance Portability and Accountability Act (“HIPAA”) also created federal criminal statutes that prohibit knowingly
and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations,
or promises, any of the money or property owned by, or under the custody or control of, a healthcare benefit program, regardless of whether
the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing
a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing, or covering up by any trick or
device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits,
items, or services relating to healthcare matters. The ACA, as amended, modified the intent requirement under the certain portions of
these federal criminal statutes such that a person or entity no longer needs to have actual knowledge of the statute or specific intent
to violate it. The ACA further created federal requirements for reporting, by applicable manufacturers of covered therapeutics, payments
and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and other
healthcare providers and their immediate family members.

Many
states have also adopted laws similar to each of the above federal laws, which may be broader in scope and apply to items or services
reimbursed by any third-party payor, including commercial insurers, and some have transparency laws that require reporting price increases
and related information. Certain state laws also regulate manufacturers’ use of prescriber-identifiable data. Certain states also
require implementation of commercial compliance programs and compliance with the pharmaceutical industry’s voluntary compliance
guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments or the provision
of other items of value that may be made to healthcare providers and other potential referral sources; impose restrictions on marketing
practices; or require drug manufacturers to track and report information related to payments, gifts, and other items of value to physicians
and other healthcare providers. These laws may affect our future sales, marketing, and other promotional activities by imposing administrative
and compliance burdens.

our operations are found to be in violation of any of the laws or regulations described above or any other laws that apply to us, we
may be subject to penalties or other enforcement actions, including criminal and significant civil monetary penalties, damages, fines,
disgorgement, imprisonment, exclusion from participation in government healthcare programs, corporate integrity agreements, debarment
from receiving government contracts or refusal of new orders under existing contracts, reputational harm, diminished profits and future
earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business
and our results of operations.

U.S.
Federal and State Health Information Privacy and Security Laws

There
are numerous U.S. federal and state laws and regulations related to the privacy and security of personally identifiable information (“PII”),
including health information. In particular, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health
Act, and its respective implementing regulations, establishes privacy and security standards that limit the use and disclosure of protected
health information (“PHI”), and require the implementation of administrative, physical, and technical safeguards to ensure
the confidentiality, integrity and availability of individually identifiable health information in electronic form. Our affiliated network
providers and our hospital, health system and other provider clients are all regulated as covered entities under HIPAA. Since the effective
date of the HIPAA Omnibus Final Rule on September 23, 2013, HIPAA’s requirements are also directly applicable to the independent
contractors, agents and other “business associates” of covered entities that create, receive, maintain or transmit PHI in
connection with providing services to covered entities. We are a business associate under HIPAA when we are working on behalf of our
affiliated providers.

Violations
of HIPAA may result in civil and criminal penalties. A single breach incident can result in violations of multiple standards. We must
also comply with HIPAA’s breach notification rule. Under the breach notification rule, covered entities must notify affected individuals
without unreasonable delay in the case of a breach of unsecured PHI, which may compromise the privacy, security or integrity of the PHI.
In addition, notification must be provided to Health and Human Services (“HHS”) and the local media in cases where a breach
affects more than 500 individuals. Breaches affecting fewer than 500 individuals must be reported to HHS on an annual basis. The regulations
also require business associates of covered entities to notify the covered entity of breaches by the business associate.

State
attorneys general also have the right to prosecute HIPAA violations committed against residents of their states. While HIPAA does not
create a private right of action that would allow individuals to sue in civil court for a HIPAA violation, its standards have been used
as the basis for the duty of care in state civil suits, such as those for negligence or recklessness in misusing personal information.
In addition, HIPAA mandates that HHS conduct periodic compliance audits of HIPAA covered entities and their business associates for compliance.
It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive
a percentage of the Civil Monetary Penalty fine paid by the violator. In light of the HIPAA Omnibus Final Rule, recent enforcement activity,
and statements from HHS, we expect increased federal and state HIPAA privacy and security enforcement efforts. HIPAA also required HHS
to adopt national standards establishing electronic transaction standards that all healthcare providers must use when submitting or receiving
certain healthcare transactions electronically.

Many
states in which we or our research and development partners may operate also have laws that protect the privacy and security of sensitive
and personal information, including health information. These laws may be similar to or even more protective than HIPAA and other federal
privacy laws. For example, the laws of the State of California are more restrictive than HIPAA. Where state laws are more protective
than HIPAA, we must comply with the state laws to which we are subject, in addition to HIPAA. In certain cases, it may be necessary to
modify our planned operations and procedures to comply with these more stringent state laws. Not only may some of these state laws impose
fines and penalties upon violators, but also some, unlike HIPAA, may afford private rights of action to individuals who believe their
personal information has been misused.

addition to HIPAA and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws
that prohibit unfair privacy and security practices and deceptive statements about privacy and security and laws that place specific
requirements on certain types of activities, such as data security and texting.

recent years, there have been a number of well-publicized data breaches involving the improper use and disclosure of PII and PHI. Many
states have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take
certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials.
In addition, under HIPAA and pursuant to the related contracts that we enter into with our business associates, we must report breaches
of unsecured PHI to our contractual partners following discovery of the breach. Notification must also be made in certain circumstances
to affected individuals, federal authorities and others.

Employees

As
of December 31, 2025, we had a staff of 108 full-time employees.

Corporate
Information

were incorporated in Texas on December 14, 2001. Our principal executive offices are located at 1200 Summit Ave, Suite 414, Fort Worth,
Texas 76102, telephone number (817) 529-2300. Our website address is www.sanaramedtech.com. Information accessed through our website
is not incorporated into this annual report and is not a part of this annual report.

Available
Information

Company electronically files reports with the Securities and Exchange Commission (the “SEC”). The SEC maintains an Internet
site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC. Copies of the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
and amendments to those reports filed or furnished to the SEC are also available free of charge through the Company’s investor
relations website (https://ir.sanaramedtech.com) as soon as reasonably practicable after electronically filing with or otherwise furnishing
such information to the SEC and are available in print to any shareholder who requests them.