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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C.
20549

 FORM 10-K

 ANNUAL
 REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2024

 or

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

 For the transition period from ________ to ________

 Commission File Number 001-39678

 SANARA MEDTECH INC.

 (Exact name of Registrant as specified in its charter)

 Texas

 59-2219994

 (State or other jurisdiction
 of

 (I.R.S. Employer

 incorporation or organization)

 Identification No.)

 1200
 Summit Ave, Suite 414, Fort Worth, Texas 76102

 (Address of principal executive offices)

 (817) 529-2300

 (Registrant's telephone number, including area
code)

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

 Title of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common Stock, $0.001 par value

 SMTI

 The Nasdaq Capital Market

 Securities registered pursuant to Section 12(g)
of the Exchange Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act..

Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
 No

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

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

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

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

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

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2024 (the
last business day of the registrant's most recently completed second fiscal quarter), based on the $28.22 closing price as of such
date, was approximately $ 118,175,765.

 As
of March 18, 2025, 8,901,903 shares of the Issuer's common stock, $ 0.001 par value per share, were issued and outstanding.

 DOCUMENTS
INCORPORATED BY REFERENCE

 The
information required by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is incorporated by reference
to the registrant's Definitive Proxy Statement on Schedule 14A relating to the 2025 Annual Meeting of Shareholders which will be
filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form
10-K relates.

 SANARA MEDTECH INC.

 Form 10-K

 For the Year Ended December 31, 2024

 Page

 PART
 I.

 ITEM 1

 BUSINESS

 ITEM 1A

 RISK FACTORS

 ITEM 1B

 UNRESOLVED
 STAFF COMMENTS

 ITEM 1C

 CYBERSECURITY

 ITEM 2

 PROPERTIES

 ITEM 3

 LEGAL PROCEEDINGS

 ITEM 4

 MINE SAFETY
 DISCLOSURES

 PART II.

 ITEM 5

 MARKET
 FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 ITEM 6

 RESERVED

 ITEM 7

 MANAGEMENT'S
 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 ITEM 7A

 QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM 8

 FINANCIAL
 STATEMENTS AND SUPPLEMENTARY DATA

 ITEM 9

 CHANGES
 IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM 9A

 CONTROLS
 AND PROCEDURES

 ITEM 9B

 OTHER INFORMATION

 ITEM 9C

 DISCLOSURE
 REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 PART III.

 ITEM 10

 DIRECTORS,
 EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 ITEM 11

 EXECUTIVE
 COMPENSATION

 ITEM 12

 SECURITY
 OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 ITEM 13

 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 ITEM 14

 PRINCIPAL
 ACCOUNTING FEES AND SERVICES

 PART IV.

 ITEM 15

 EXHIBITS
 AND FINANCIAL STATEMENT SCHEDULES

 ITEM 16

 FORM 10-K
 SUMMARY

 Sanara, Sanara MedTech, our logo and our other
trademarks or service marks appearing in this report are the property of Sanara MedTech Inc. Trade names, trademarks and service marks
of other companies appearing in this report are the property of their respective owners. Solely for convenience, the trademarks, service
marks and trade names included in this report are without the, or other applicable symbols, but such references are not
intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the
applicable licensors to these trademarks, service marks and trade names.

 Unless otherwise indicated, "Sanara MedTech,"
"Sanara," the "Company," "our," "us," or "we," refer to Sanara MedTech Inc.
and its consolidated subsidiaries.

 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

 This report contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating
performance, including topics such as our value-based wound and skincare services and Tissue Health Plus platforms. In some cases, you
can identify forward-looking statements because they contain words such as "aims," "anticipates," "believes,"
"contemplates," "continue," "could," "estimates," "expects," "forecast,"
"guidance," "intends," "may," "plans," "possible," "potential,"
"predicts," "preliminary," "projects," "seeks," "should," "target,"
"will" or "would" or the negative of these words, variations of these words or other similar terms or expressions
that concern our expectations, strategy, plans, or intentions. Such forward-looking statements are subject to certain risks, uncertainties
and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including,
without limitation, the following:

 shortfalls in forecasted revenue growth;

 our ability to implement our value-based
 wound and skincare strategy through acquisitions and investments and our ability to realize
 the anticipated benefits of such acquisitions and investments;

 our ability to meet our future capital
 requirements;

 our ability to maintain compliance with
 our debt obligations;

 our ability to develop and commercialize
 new products and products under development, including the manufacturing, distribution, marketing
 and sale of such products;

 our ability to retain and recruit key
 personnel;

 the intense competition in the markets
 in which we operate and our ability to compete within our markets;

 the failure of our products to obtain
 market acceptance;

 the effect of security breaches and other
 disruptions;

 our ability to maintain effective internal
 controls over financial reporting;

 our ability to maintain and further grow
 clinical acceptance and adoption of our products;

 the impact of competitors inventing products
 that are superior to ours;

 disruptions of, or changes in, our distribution
 model, consumer base or the supply of our products;

 the failure of third-party assessments
 to demonstrate desired outcomes in proposed endpoints;

 our ability to successfully expand into
 value-based wound, skincare and other services;

 our ability and the ability of our research
 and development partners to protect the proprietary rights to technologies used in certain
 of our products and the impact of any claim that we have infringed on intellectual property
 rights of others;

 our dependence on technologies and products
 that we license from third parties;

 the effects of current and future laws,
 rules, regulations and reimbursement policies relating to the labeling, marketing and sale
 of our products, and our planned launch of value-based wound, skincare and other services
 and our ability to comply with the various laws, rules and regulations applicable to our
 business; and

 the effect of defects, failures or quality
 issues associated with our products.

 All forward-looking statements speak only as of the
date on which they are made. For a more detailed discussion of these and other factors that may affect our business, see the discussion
in "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" in this report. We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes
to the foregoing factors may occur, that could impact our business. We do not undertake any obligation to update any forward-looking
statement, whether written or oral, relating to the matters discussed in this report, except to the extent required by applicable securities
laws.

 Item 1. BUSINESS

 Overview

 We are a medical technology company focused on developing
and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic
wound and skincare markets. Our products, services and technologies are designed to achieve our goal of providing better clinical outcomes
at a lower overall cost for patients regardless of where they receive care. Through our two operating segments, Sanara Surgical and Tissue
Health Plus ("THP"), we strive to be one of the most innovative and comprehensive providers of effective surgical, wound
and skincare solutions and are continually seeking to expand our offerings for patients requiring treatments across the entire continuum
of care in the United States.

 Reportable Segments

 Historically, we managed our business on the basis
of one operating and reportable segment. During the second quarter of 2024, we changed our reportable segments to reflect a change in
the manner in which the business is managed. Based on the growing importance of the value-based wound care program to our future outlook
and how our chief operating decision maker, our Chief Executive Officer, reviews operating results and makes decisions about resource
allocation, we now have two reportable segments: Sanara Surgical and THP.

 Our Sanara Surgical segment primarily markets and
sells soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Sanara Surgical's
soft tissue repair products include, among other products, our lead product, CellerateRX Surgical Activated Collagen ("CellerateRX
Surgical"), a hydrolyzed collagen that supports a local environment for surgical sites to aid in the natural wound healing process,
and BIASURGE Advanced Surgical Solution ("BIASURGE"), a sterile no-rinse, advanced surgical solution used for wound irrigation.
Sanara Surgical's bone fusion products include, among other products, BiFORM Bioactive Moldable Matrix ("BiFORM"),
an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site, and ALLOCYTE Plus Advanced Viable
Bone Matrix ("ALLOCYTE Plus"), a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable
bone fibers.

 Our Sanara Surgical segment also includes an in-house
research and development team (Rochal Technologies) with an extensive pipeline of innovative products under development.

 Tissue Health Plus

 Our THP segment is focused on value-based wound care
services. Through THP, we plan to offer a first of its kind value-based wound care program to payers and risk-bearing entities, such
as accountable care organizations and value-based primary care companies, with Medicare Advantage payers as the initial target market
for this program.

 THP's programs are expected to enable
payers to divest wound care spend risk, reduce wound related hospitalizations and improve patient quality of life. THP plans to
coordinate delivery of community and home-based wound care for its managed patients. Community based care spans a variety of
settings including physician offices, skilled nursing facilities, assisted living facilities and senior living facilities. THP
programs are intended to integrate science and evidence-based medicine protocols to standardize wound prevention and treatment. We
are preparing to launch our first pilot program with a wound care provider group during the second quarter of 2025.

 Summary of Our Product, Service and Technology
Offerings and Development Programs

 Sanara Surgical Products

 Our Sanara Surgical segment markets and distributes
surgical, wound and skincare products to physicians, hospitals, clinics, and post-acute care settings. Our products are primarily sold
in the U.S. surgical tissue repair and advanced wound care markets. We believe we have the ability to drive our product pipeline from
concept to preclinical and clinical development while meeting quality and regulatory requirements. We are constantly seeking long-term
strategic partnerships with a focus on products that improve outcomes at a lower overall cost.

 CellerateRX Surgical

 CellerateRX Surgical is a medical hydrolysate of
Type I bovine 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 powder is sterilized and packaged for use in the operating room or other sterile environment. CellerateRX Surgical products are primarily
purchased by hospitals and ambulatory surgical centers for use by surgeons on surgical wounds. The majority of CellerateRX Surgical
products are used for a variety of surgical wounds, including those associated with orthopedic, spine, trauma and oncologic
procedures. Additional surgical wounds that may benefit from the use of CellerateRX Surgical include cardiovascular, gynecologic,
urologic, vascular and plastic/reconstructive 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. First sales of BIASURGE occurred in November 2023.

 FORTIFY TRG

 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. First sales of this product
occurred in the fourth quarter of 2021.

 FORTIFY FLOWABLE

 FORTIFY FLOWABLE Extracellular Matrix ("FORTIFY
FLOWABLE") is an advanced wound care device that presents small intestine submucosa extracellular matrix technology in a way that
can fill irregular wound shapes and depths. FORTIFY FLOWABLE is indicated for the management of wounds, including partial and full-thickness
wounds, pressure ulcers, venous leg ulcers, diabetic foot ulcers, chronic vascular ulcers, tunneled/undermined wounds, surgical wounds
(donor sites/grafts, post-Mohs surgery, post-laser surgery, podiatric, wound dehiscence sites), traumatic wounds (abrasions, lacerations,
second-degree burns, and skin tears) and draining wounds. FORTIFY FLOWABLE is provided sterile and is intended for one-time use. It is
a 510(k) cleared product. First sales of this product occurred in the first quarter of 2022.

 Other Surgical 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 matrices containing bone-derived progenitor
cells and conformable bone fibers. These viable cellular allografts are ready to use upon thawing and have fibrous handling properties.

 Tissue Health Plus Services and Technology

 Through our subsidiary, Tissue Health Plus (formerly
known as "WounDerm" and "United Wound and Skin Solutions, LLC"), we are seeking to simplify skin health, starting
with wound care through a refined business plan. Through THP, we plan to offer a first of its kind value-based wound care program to
payers and risk-bearing entities such as accountable care organizations and value-based primary care companies, with Medicare Advantage
payers as the initial target segment for this program.

 THP's programs are expected to enable
payers to divest wound care spend risk, reduce wound related hospitalizations and improve patient quality of life. THP plans to
coordinate delivery of community and home-based wound care for its managed patients. Community based care spans a variety of
settings including physician offices, skilled nursing homes, assisted living facilities and senior living facilities. THP programs
are intended to integrate science and evidence-based medicine protocols to standardize wound prevention and treatment. THP services
are not expected to directly involve telemedicine or virtual consult services, and such services are no longer a primary focus of THP.

 We anticipate that THP's customer contracts
will have three-to-five-year terms. These contracts are expected to incorporate a mix of value-based pricing methodologies including
episodic, "per member per month," and "fee for value" pricing. We believe this approach is aligned with the financial
goals of the payers and will help deliver outstanding clinical outcomes for the patients.

 Our vision for our comprehensive approach consists
of three key sets of planned capabilities:

 (a)
 Care Hub – This virtual
 patient monitoring, care coordination and navigation center is expected to help doctors and
 nurses support their patients throughout their wound care journey, from prevention to treatment.
 We expect to have Care Hub staffed by wound care certified nurse practitioners ("NPs")
 and registered nurses ("RNs"), incorporating care delivery best practices from
 partnerships with Direct Dermatology Inc. and certain physician-led multispecialty wound
 care groups. With NPs leading Care Hub, RNs are expected to be the wound specialists, providing
 patients with expert review and support of the overarching plan of care on each patient's
 journey through the process. In addition, care navigators are expected to serve as a primary
 point of contact for patients and their providers, coordinating care, managing appointments
 and ensuring seamless communication among all team members.

 (b)
 Managed Services Organization ("MSO")
 Network – With respect to patient-side wound care, our plan is that THP's
 programs would be performed by a network of third-party providers who will be contracted
 through managed services agreements. These providers would include podiatrists, wound care
 provider groups, primary care physicians, and home health agencies. The providers in the
 THP network are expected to leverage THP's standard of care, patient education and
 tools to deliver optimal patient outcomes with high predictability and efficiency.

 (c)
 Technology Platform – THP's
 technology platform will focus on scaling workflows of THP's Care Hub and MSO Network
 through automation and integration. We expect the THP technology platform to enable enhanced
 patient empowerment and self-healthcare. We anticipate that our platform will leverage our
 technology investments and partnerships with Precision Healing Inc. ("Precision Healing"),
 Pixalere Healthcare, Inc. and others, by leveraging modern technology including artificial
 intelligence and machine learning. Our platform technology is expected to manage program
 economics, standards of care, patient monitoring, wound assessments, network performance
 monitoring, and revenue cycle management. We expect that each of these components will work
 in concert with each other, constantly improving economics and care delivery.

 We are seeking partners to facilitate commercialization
of THP and share in the cost of development of the program.

 SI Healthcare Technologies Joint Venture

 In November 2022, we established a 50/50 joint venture,
SI Healthcare Technologies, LLC ("SI Technologies") (formerly known as SI Wound Care, LLC), with InfuSystem Holdings, Inc.
("InfuSystem") focused on delivering a complete wound care solution targeted at improving patient outcomes, lowering the
cost of care, and increasing patient and provider satisfaction. The partnership is expected to enable InfuSystem to offer innovative
products, including our advanced wound care product line and Chemo Mouthpiece, a 510(k) cleared oral cryotherapy device that SI Technologies
currently has the right to distribute and sell in the United States.

 Tufts University License Agreement

 In December 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. Pursuant to 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.

 Strategy

 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, services and technology-based offerings portfolio and
relationships with key constituents to deepen our presence in the surgical, wound and skincare 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, services and technology-based offerings, our salesforce's
ability to reach additional customers in new and existing geographic regions while penetrating further in existing customer accounts
will be enhanced.

 Launch new
innovative products. We are actively developing additional proprietary products for the surgical and chronic wound and skincare
markets. We expect these products and services to deepen our portfolio of technologies to improve surgical site outcomes and treat
chronic wounds. We are focused on offering additional products and services that are more efficacious than competing products and
services and provide a stronger value proposition (lower total cost to heal and less time to heal, leading to reduced costs to the
healthcare system).

 Seek and
establish partnerships and product, services and/or technology acquisitions. We plan to continue to seek and establish
partnerships in the United States and internationally to provide innovative products, services and technologies. We believe that
partnerships will be a key driver of our growth in the future. We also intend to selectively pursue acquisitions of businesses and
technologies that complement our existing strategy and footprint.

 Seek and
establish partnerships for THP with Medicare Advantage, at-risk payors and other types of healthcare at-risk models. We believe
we have assembled the products, services and technologies to offer a comprehensive strategy to help improve outcomes and lower wound
care costs across the continuum of care. Looking ahead, we plan to leverage these capabilities to partner with value-based care
models to aid in the treatment of their wound care patients who currently are a significant cost for the healthcare system and
challenging population to heal.

 Aid in the
treatment of patients throughout the entire continuum of care. We intend to continue expanding our platform to aid in treating
wound and skincare patients as they progress through the healing process in all care settings. We formed THP to hold certain
investments in technologies and operations in value-based wound and skincare services. We believe our service offerings will allow
us to collect and analyze large amounts of data on patient conditions and outcomes that will improve treatment protocols and
ultimately lead to more evidence-based healing formularies to improve outcomes in the future. We anticipate that this data will also
enable us to participate in the creation of new standards of care that promote patient compliance and enable direct dialogue between
patients, clinicians and payors, resulting in greater satisfaction for patients, their caregivers, clinicians and payors.

 Competitive Strengths

 Attractive
markets for surgical and wound care. We believe the surgical and wound care markets will continue to see accelerated growth
given favorable global tailwinds that include an aging population, extended life expectancies, increasing costs of health care,
recognition of difficult-to-treat infection threats such as biofilms, and the increasing prevalence of diabetes and obesity. We
believe there will be growing adoption of our products due to their clinical efficacy and cost effectiveness for all key
constituents compared to traditional wound care products.

 Comprehensive
solution for improved wound care outcomes. We are dedicated to offering a comprehensive portfolio of products, services and
technologies to improve wound care treatment outcomes. We believe we are the only company that will be able to provide a
comprehensive solution for wound care which includes a wound and skin specific electronic medical record, coordination of virtual
consult services with expert wound care providers and dermatologists, propriety diagnostics and highly efficacious proprietary
products allowing us to effectively treat wound care patients in any care setting.

 Wound care
products for all care settings. Our wound care product portfolio allows clinicians to personalize solutions to meet the needs of
individual wound care patients in all care settings including acute (hospitals and long-term acute care hospitals) and post-acute
(wound care clinics, physician offices, skilled nursing facilities ("SNFs"), home health, hospice, podiatrists and
retail).

 Innovative
pipeline and proven clinical performance. We have a robust pipeline of surgical, wound and skincare products that we expect to
market in the near term. We believe the efficacy of our offerings will be proven via statistically significant collected and
analyzed clinical and health economic outcomes data, resulting in expanded adoption of our products at a lower overall cost to
payors.

 Proven executive
leadership team with a long-term track record of value creation. We are led by a dedicated and seasoned management team with significant
industry experience who have successfully executed our strategic implementation to date by launching new products and technologies through
investment in new areas of growth. We believe our management team has the vision and experience to implement our future growth strategy.

 Market Opportunities for Our Products, Services
and Technology-Based Offerings

 According to a study published by the Value in
Health journal, roughly 15% of the Medicare beneficiary population has chronic nonhealing wounds. Chronic wounds do not advance through
the phases of healing in a normal progression and do not show significant progress toward healing in 30 days. Factors contributing to
the chronicity of the wound may include pressure/friction, trauma, insufficient blood flow and oxygenation in locations such as the lower
extremities, increased bacterial load, excessive proteases, degraded growth factors, matrix metalloproteinases, senescent/aberrant cells
or inappropriate treatment. Examples of chronic wounds include diabetic foot ulcers ("DFUs"), venous leg ulcers ("VLUs"),
arterial ulcers, pressure ulcers and hard-to-heal surgical/traumatic wounds. In each of the various wound types, the presence of biofilms
is a frequent cause for chronicity of wounds and the removal of biofilms is a crucial step to commence healing. Biofilms need to be eradicated
to prevent further deterioration of the wound that may result in additional negative patient outcomes. If not effectively treated, these
wounds can lead to potentially severe complications, including further infection, osteomyelitis, fasciitis, amputation and increased
mortality. Chronic wounds are primarily seen in the elderly population. For example, a 2019 study published in Advances in Wound Care
 reported that in the United States, 3% of the population over the age of 65 had open wounds. According to the same study, in 2020,
the U.S. government estimated that the elderly population totaled 55 million people, suggesting that chronic wounds will continue to
be an increasingly persistent problem in this population. Four common chronic and other hard-to-heal wounds are:

 Surgical/traumatic
wounds. Surgical wounds form as a result of various types of surgical procedures such as investigative or corrective, minor or
major, open (traditional) or minimal access surgery, elective or emergency, and incisions (simple cuts) or excision (removal of
tissue), among others. Traumatic wounds form as a result of external forces causing tissue damage such as lacerations, puncture
wounds or tissue loss. Severe traumatic wounds may require surgical intervention to close the wound and stabilize the patient.
Surgical/traumatic hard-to-heal wounds develop for various reasons, such as local surgical complications, suboptimal closure
techniques, presence of foreign materials, exposed bones or tendons and infection. In the United States, millions of people receive
post-surgical wound care annually, and the typical operative patient has comorbidities that create challenges with post-operative
wound healing.

 Diabetic Foot
Ulcers. Diabetes can lead to a reduction in blood flow, which can cause patients to lose sensation in their feet and may prevent
them from noticing injuries, sometimes leading to the development of DFUs, which are open sores or ulcers on the feet that may take
several weeks to heal, if ever. Diabetes is associated with pathological changes that contribute to poor wound healing. These
changes may include peripheral vascular disease, neuropathy, excessive inflammation, and a disrupted cellular response to wound
healing. According to the 2020 National Diabetes Statistics Report by the Center for Disease Control and Prevention, in the United
States alone, over 34 million people, or approximately 10% of the population, suffer from diabetes, a chronic, life-threatening
disease.

 Venous Leg
Ulcers. VLUs are the most common type of chronic wound in the lower extremity. VLUs develop as a result of vascular
insufficiency, or the inability for the vasculature of the leg to return blood back toward the heart properly and, according to a
2013 report published by the International Journal of Tissue Repair and Regeneration, VLUs affect approximately 600,000 people per
year in the United States alone. According to a 2023 report published by the Journal of Vascular Surgery, Venous and
Lymphatic Disorders, chronic venous disorders are common, with varicose veins occurring in 40% of the population. These ulcers
usually form on the sides of the lower leg, above the ankle and below the calf, and are slow to heal and often recur if preventative
steps are not taken. The presence of a VLU represents the sequela of progressive end-stage chronic venous disease, often related to
a previous blood clot. The risk of VLUs can be increased as a result of a blood clot forming in the deep veins of the legs, obesity,
smoking, lack of physical activity or work that requires many hours of standing.

 Pressure
Injury/Ulcers. Pressure injury/ulcers are injuries to the skin and underlying tissue resulting from prolonged pressure, or
pressure in combination with shear or friction. Constant pressure on an area of skin reduces blood supply to the area and over time
can cause the skin to break down and form an open ulcer. These often occur in patients who are hospitalized or confined to a chair
or bed and most often form on the skin over bony areas, where there is little cushion between the bone and the skin, such as heels,
ankles, hips and the tailbone. Annually, more than 2.5 million people develop pressure ulcers in the United States according to a
2019 study published in the National Library of Medicine.

 Recent Published Studies on CellerateRX Surgical

 An animal study model by the Indiana University Center
for Regenerative Medicine and Engineering and the McGowan Institute for Regenerative Medicine was published in Advances in Wound Care
in September of 2023. The study, titled "Hydrolyzed Collagen Powder Dressing Improves Wound Inflammation, Perfusion, and Breaking
Strength of Repaired Tissue," demonstrated the effects of CellerateRX Surgical powder on resolution of wound inflammation, perfusion,
closure, and breaking strength of the repaired skin. Moreover, the study provided translational research validating published clinical
case series and further highlighting mechanistic effects of hydrolyzed collagen. Future empirical and clinical research revealing the
unique support hydrolyzed collagen provides the wound environment is currently ongoing.

 Several research findings involving CellerateRX Surgical
powder have been noted in scientific literature. For example, in November 2021, Dr. William Hotchkiss published a retrospective study
of 154 patients in JSM Neurosurgery and Spine, in which patients underwent spinal surgery and CellerateRX Surgical was utilized in the
surgical wound. The study found a lower wound dehiscence rate in a high-risk patient population when compared to previously published
wound complication rates in the literature. Another retrospective case study regarding the use of CellerateRX Surgical was published
by Dr. Alex Gitelman in November 2022. This study of 54 patients undergoing spinal surgery demonstrated no incidence of surgical wound
complication.

 In a retrospective study published in the Journal
of Surgery in October 2023, the impact of CellerateRX Surgical collagen on surgical site infection rates in elective multispecialty
surgical procedures was case matched 1:3 for a total of 5,335 patients and demonstrated an overall reduction of 59% in surgical site
infection rates. This reduction was most pronounced in the clean cases with a 69% decrease in surgical site infection rates.

 Intellectual Property

 Since the acquisition of assets from Rochal Industries,
LLC ("Rochal") in July 2021, the acquisition of Precision Healing in April 2022, and the 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, services
and technologies for the surgical and chronic wound and skincare markets and actively working with third-party research and development
partners. For our internally developed products, we seek patent protection for our inventions in order to protect and differentiate our
products and technologies 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.

 In 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, eight 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) relating to BIASURGE Surgical Irrigation, BIAK S
Antimicrobial Skin & Wound Cleanser and BIAK S Antimicrobial Wound Gel, as well as over 100 issued patents in foreign jurisdictions.
Following our acquisition by merger of Precision Healing in April 2022, our patent portfolio now includes, among others, five pending
U.S. patent applications as well as one pending international patent application. Following the Applied Asset Purchase in August 2023,
our portfolio also now includes, among others, nine additional U.S. patent applications, five trademarks, four 510(k) clearances and
various domain names.

 In 2024, our research and development team submitted
11 provisional patent applications covering innovations in proprietary antimicrobial technologies and hydrolyzed collagen, including
novel formulations, treatment applications and key component advancements.

 Our pending patent applications and new filings are
representative of our ongoing efforts to broaden our portfolio as we continue developing new products for the surgical and wound and
skincare markets. We intend to further grow our patent portfolio by continuing to patent new products as they are developed, to defend
intellectual property as we believe necessary by actively pursuing any infringements, to pursue the commercial opportunities our patents
provide for our innovations, and to continue to develop our brands and trademarks.

 Sales and Marketing

 As of December 31, 2024, we employed 40 U.S.
based field sales representatives. Our field sales representatives are recruited based on their previous industry experience and professional
performance. We constantly evaluate new markets and sales opportunities to add to our sales teams as warranted.

 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, new hire
field sales representatives participate in field training with experienced field trainers to get insights into best practice as well
as real world training. The initial training period lasts approximately eight weeks. Field sales representatives are supported by regular
updated training modules on product information and best practices.

 A key component of our sales and marketing 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 and marketing efforts are
successful, the clinicians then advocate for the use of our products when medically necessary.

 Manufacturing, Supply and Production

 We 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

 We do not promote our products based on their reimbursement
status, however, we are mindful of the benefits of a favorable reimbursement coverage status to increase patient access and support our
research and development efforts to supply the highest efficacy solutions.

 We anticipate that our THP strategy, once launched,
will provide a significant amount of patient data to help us measure our products' effectiveness on improving patient outcomes
while simultaneously reducing healthcare costs. We believe our reimbursement strategy, including establishing the clinical validation,
clinical utility and health economics of our products, will allow us to drive improved reimbursement coverage for our products and technologies.

 Competition

 The 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 primary dressings, advanced wound
care products, collagen matrices, surgical wound irrigation products and other biopharmaceutical products. Manufacturers and distributors
of competitive products include Medline Industries, Inc., ConvaTec Group plc, 3M Company, Integra LifeSciences
Holdings Corporation and numerous others. Many of our competitors are significantly larger than we are and have greater financial and
personnel resources.

 With respect to our comprehensive value-based care
strategy, THP plans to offer a comprehensive wound care and dermatology strategy to expand cost-effective, high-quality wound and skincare
to all patients throughout the care setting continuum. Although novel in its comprehensive offerings and solutions, there are existing
competitors for each of the verticals in which THP plans to offer services and solutions. Any clinical wound care or dermatology physician
provider group that has incorporated telemedicine into their practice could be considered competitive. However, most of these groups
are not offering value-based care contracts to payers, integrating prevention into their programs, or enabling continuity across the
different settings of care. Examples of large wound care specialty practices may include Vohra Physician Group, Healogics Specialty Physicians
and WoundTech.

 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 and healthcare services
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.

 FDA Regulation

 Our medical products and operations are regulated
by 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.

 In 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 System Regulation ("QSR"), 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.

 The 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 QSR.

 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 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 QSR (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;

 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.

 We 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 QSR, 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 cost 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 current good tissue practices ("cGTP"), among other things.

 Federal Trade Commission Regulatory Oversight

 Our advertising for our products and services 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 services or 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, CMS, 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.

 The 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.

 The 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.

 The 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.

 The Health Insurance Portability 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.

 If 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.

 Telemedicine Standards, and Related Laws and
Guidelines

 We have entered into a professional services agreement
with and made a minority investment in DirectDerm, a dermatology telemedicine company based in California, which has an exclusive network
of dermatologists.

 The delivery of telemedicine services directly or
through contractual relationships is subject to various federal, state, and local laws, regulations and approvals, relating to, among
other things, the health provider licensure, adequacy and continuity of medical care, medical practice standards (including specific
requirements when providing healthcare utilizing telemedicine technologies and consulting services among providers), medical records
maintenance, personnel supervision, and prerequisites for the prescription of medication. The application of some of these laws to telemedicine
is unclear and subject to differing interpretation. Further, laws and regulations specific to delivering medical services utilizing telemedicine
technologies continues to evolve with some states incorporating modality and consent requirements for certain telemedicine encounters.

 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.

 In 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.

 In 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, 2024, we had a staff of 141
full-time employees.

 Corporate Information

 We 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

 The 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 Report 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 (
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.

 Item 1A. RISK FACTORS

 The risks below are those that we believe are the
material risks that we currently face but are not the only risks facing us and our business. If any of these risks actually occur, our
business, financial condition and results of operations could be materially adversely affected. Below is a summary of our risk factors
with a more detailed discussion following.

 We have had a history of losses,
 which may continue as we expand our investment in THP.

 Our revenue growth for a particular
 period is difficult to predict, and a shortfall in forecasted revenues may harm our operating
 results.

 Our current comprehensive, value-based
 wound and skincare strategy involves growth through technology development acquisitions and investments, which requires
 us to incur substantial costs and potential liabilities for which we may never realize the
 anticipated benefits.

 Failure to manage our growth strategy
 could harm our business.

 If we are unable to compete within
 our markets or our products, services and technologies do not gain market acceptance, our
 financial condition and operating results could suffer.

 Security breaches and other disruptions
 could compromise our information and expose us to liability, which would cause our business
 and reputation to suffer.

 If we fail to maintain an effective
 system of internal controls over financial reporting, we may not be able to accurately report
 our financial results or prevent fraud and our business may be harmed and our stock price
 may be adversely impacted.

 Our indebtedness could adversely
 affect our financial condition and prevent us from fulfilling our obligations.

 Our outstanding indebtedness is
 subject to certain operating and financial covenants that restrict our business and financing
 activities and may adversely affect our cash flow and our ability to operate our business.

 We rely on our research and development
 partners to design, manufacture and supply certain products we have licensed for marketing.
 If we or one of our partners fails to perform adequately, fulfill our needs, or comply with
 regulations, we may be required to incur significant costs or even be subject to enforcement
 actions. We also may face significant delays in our product introductions and commercialization.

 Revenue generated from the sale
 of certain products is dependent on license agreements with certain manufacturers, and the
 termination of any of these license agreements could harm our business.

 Certain of our product candidates
 are still under development, and we may not be able to successfully commercialize any of
 these product candidates.

 Our future success will largely
 depend on our ability to maintain and further grow clinical acceptance and adoption of our
 products, and we may be unable to adequately educate healthcare practitioners on the use
 and benefits of our products.

 Disruption of, or changes in, our
 distribution model or customer base could harm our sales and margins.

 Interruptions in the supply of our
 products or inventory loss may adversely affect our business, financial condition and results
 of operations.

 Failure of any third-party assessments
 to demonstrate desired outcomes in proposed endpoints could have a negative impact on our
 business performance.

 Increased prices for, or unavailability
 of, raw materials used in our products could adversely affect our business, financial condition
 and results of operations.

 Our planned expansion into value-based
 wound, skincare and other services could have a material adverse effect on our business,
 financial condition and results of operations.

 Our planned expansion into value-based
 wound, skincare and other services will require entrance into certain markets, in which,
 in some cases, we have limited experience, which may not be successful and could be costly.

 If we are unable to adequately protect
 our intellectual property rights, we may not be able to compete effectively.

 CellerateRX Surgical is not currently
 protected by any pending patent application or any unexpired patent. CellerateRX Surgical
 may be subject to competition from the sale of substantially equivalent products that could
 adversely affect our business and operations.

 We may be found to infringe on or
 violate the intellectual property rights of others.

 Our business is affected by numerous
 regulations relating to the development, manufacture, distribution, labeling, marketing and
 sale of our products.

 We are subject to various governmental
 regulations relating to the labeling, marketing and sale of our products.

 If we fail to obtain or experience
 significant delays in obtaining regulatory clearances or approvals to market future medical
 device products, we will be unable to commercialize these products until such clearance or
 approval is obtained.

 Delays in or changes to the FDA
 clearance and approval processes or ongoing regulatory requirements could make it more difficult
 for us to obtain FDA clearance or approval of new products or comply with ongoing requirements.

 Disruptions in the FDA and other government agencies caused
 by leadership changes, funding shortages, or other legal or political pressures could hinder
 their ability to hire and retain key personnel, provide regulatory clarity, or otherwise
 prevent new products and services from being developed or commercialized in a timely manner
 or hinder our ability to continue marketing existing commercial products, which could negatively
 impact our business.

 Failure to obtain or maintain adequate
 reimbursement or insurance coverage for our products could limit our ability to market those
 products and decrease our ability to generate revenue. Changes in reimbursement policies
 and regulations by governmental or other third-party payors may have an adverse impact on
 the use of our products.

 We rely on our research and development
 partners to comply with applicable laws and regulations relating to product classification
 and when and what types of FDA marketing authorizations are needed to lawfully commercialize
 a new or updated medical product in the United States.

 We and our employees and contractors
 are subject, directly or indirectly, to federal, state and foreign healthcare fraud and abuse
 laws, including false claims laws. If we are unable to comply, or have not fully complied,
 with such laws, we could face substantial penalties.

 We and our research and development
 partners' use of PII, including health information, is subject to federal
 and state privacy and security regulations, and our failure to comply with those regulations
 or to adequately secure the information we hold could have a material adverse effect on our
 client base, business, financial condition and results of operations.

 Our officers, employees, independent
 contractors, principal investigators, consultants and commercial partners may engage in misconduct
 or activities that are improper under other laws and regulations, which would create liability
 for us.

 We could be adversely affected if
 healthcare reform measures substantially change the market for medical care or healthcare
 coverage in the United States.

 Defects, failures or quality issues
 associated with our products could lead to product recalls or safety alerts, adverse regulatory
 actions, product liability lawsuits and other litigation and negative publicity that could
 materially adversely affect our reputation, business, results of operations and financial
 condition.

 Risks Related to How We Operate Our Business

 We have had a history of losses, which may
continue as we expand our investment in THP.

 We have incurred net losses in most years since we
began our current operations in 2004. We plan to continue making significant investments in our THP operating segment, which will substantially
increase our operating expenses. Consequently, we will need to continue our revenue growth to become profitable in future periods. If
we fail to achieve profitability, our stock price may decline, and you may lose part or all of your investment.

 Our revenue growth for a particular period
is difficult to predict, and a shortfall in forecasted revenues may harm our operating results.

 Our revenue growth and results of operations are
potentially difficult to predict. We plan our operating expense levels based primarily on forecasted revenue levels. A shortfall in
revenue could lead to operating results being below expectations, as we may not be able to quickly reduce our fixed expenses in
response to short-term revenue shortfalls. We have experienced fluctuations in revenue and operating results from quarter to quarter
and anticipate that these fluctuations will continue until we achieve a critical mass with our product and service sales. These
fluctuations can result from a variety of factors, including:

 economic conditions worldwide, including
 increases in inflation, as well as economic conditions specific to the healthcare industry,
 which could affect the ability of surgical and post-acute facilities to purchase our products
 and could result in a reduction in elective operative procedures;

 governmental regulations, including
 those adopted in response to pandemics or other potential outbreaks;

 the uncertainty surrounding our
 ability to attract new customers and retain existing customers;

 changes in reimbursement rates for
 our products by government and private insurers;

 the length and variability of our
 sales cycle, especially gaining approvals for the use of our products in additional hospitals
 and surgery centers, which makes it difficult to forecast the quarter in which our sales
 will occur;

 issues including delays in the sourcing
 of our products;

 the timing of regulatory approvals;

 the timing of operating expense
 relating to the expansion of our business and operations;

 changes in the pricing of our products
 and those of our competitors;

 the development of new surgical
 wound care products or product enhancements by our competitors; and

 actual events, circumstances, outcomes
 and amounts differing from assumptions and estimates used in preparing our operating plan
 and how well we execute our strategy and operating plans.

 As a consequence, operating results for a particular
future period are difficult to predict and prior results are not necessarily indicative of future results. Any of the foregoing factors,
or any other factors discussed elsewhere herein, could have a material adverse effect on our business.

 Our current comprehensive, value-based
wound and skincare strategy involves growth through technology development, acquisitions and investments, which requires us to incur
substantial costs and potential liabilities for which we may never realize the anticipated benefits.

 We may be unable to continue implementing our growth
strategy, and our strategy ultimately may be unsuccessful. We engage in evaluations of potential acquisitions and investments and are
in various stages of discussion regarding possible acquisitions, certain of which, if consummated, could be significant to us. Any new
acquisition or investment could result in material transaction expenses, increased interest and amortization expense, increased depreciation
expense and increased operating expense, any of which could have a material adverse effect on our operating results. In addition, if
we are unable to integrate businesses and operations that we have acquired or will acquire in the future, our profitability could suffer.
These acquisitions and investments also involve other risks, including diversion of management resources otherwise available for the
running of our business and the development of our business, as well as risks associated with entering markets in which our marketing
teams and sales force has limited experience or where experienced distribution alliances are not available. We may not be able to identify
suitable acquisition or investment candidates in the future, obtain acceptable financing or consummate any future acquisitions or investments.
In addition, certain potential acquisitions may be subject to antitrust and competition laws, which could impact our ability to pursue
strategic acquisitions and could result in mandated divestitures. If we are unsuccessful in our value-based wound and skincare strategy,
we may be unable to meet our financial targets, and our financial performance could be materially and adversely affected.

 Failure to manage our growth strategy could
harm our business.

 Our ability to successfully implement our business
plan and develop, market and sell our surgical, wound and skincare products, services and technologies requires an effective plan for
managing our future growth. Future expansion efforts will be expensive
and may strain our internal operating resources. To manage future growth effectively, we must maintain and enhance our financial and
accounting systems and controls, integrate new personnel and manage expanded operations. If we do not manage growth properly, it could
harm our operating results and financial condition.

 If we are unable to compete within our markets
or our products, services and technologies do not gain market acceptance, our financial condition and operating results could suffer.

 Competition from other medical device companies is
significant and we could be significantly affected by new product introductions and other activities of market participants. We compete
with other companies in acquiring rights to products or technologies from third-party developers. In addition, many specialized products
companies have formed collaborations with large, established companies to support research, development and commercialization of surgical
wound care products which may be competitive with ours. Academic institutions, government agencies and other public and private research
organizations are also conducting research activities and may commercialize surgical wound care products on their own or through joint
ventures. Although our products have performed well in customer evaluations, we are a relatively unknown brand in a market dominated
by companies with extensive product lines and large customer bases. We may not, even with more efficacious products, be able to secure
contracts and achieve significant growth with large national accounts.

 In addition, if the anticipated full launch of our
THP platform is successful, we will face competition from other value-based care providers. The public health emergency caused by the
COVID-19 pandemic has led to the widespread adoption of telemedicine for most health care clinical specialties, including wound care
and dermatology. As such, any clinical wound care or dermatology physician and/or provider group that has incorporated telemedicine into
their practice could be considered competitive. If we are unable to compete with other value-based care providers, our operating results
and financial condition may suffer.

 Several factors may limit the market acceptance of
our products, services and technologies, including the timing of regulatory approvals and market entry relative to competitive products,
services and technologies, the availability of alternative products, services and technologies, the price of our products, services and
technologies relative to alternative products, services and technologies, the availability of third-party reimbursement and the extent
of marketing efforts by third-party distributors or agents that we retain. Our products, services or technologies may not receive market
acceptance in a commercially viable period of time, if at all. Furthermore, our competitors may develop products, services or technologies
that are more effective or achieve greater market acceptance than those being developed by us, which would render our products, services
and technologies less competitive or obsolete.

 Our competitors enjoy several competitive advantages
over us, including but not limited to:

 large and established distribution
 networks in the United States and/or in international markets;

 greater financial, managerial and
 other resources for products research and development, sales and marketing efforts and protecting
 and enforcing intellectual property rights;

 greater name recognition;

 larger consumer bases;

 more expansive portfolios of products
 and intellectual property rights; and

 greater experience in obtaining
 and maintaining regulatory approvals and/or clearances from the FDA and other regulatory
 agencies.

 The presence of competition in our market may lead
to pricing pressure which would make it more difficult to sell our products, services and technologies at a profitable price or may prevent
us from selling our products at all. Our failure to compete effectively would have a material adverse effect on our business.

 Security breaches and other disruptions could
compromise our information and expose us to liability, which would cause our business and reputation to suffer.

 In the ordinary course of our business, we use networks
to collect and store sensitive data, including intellectual property, proprietary business information and important information of our
customers, suppliers and business partners, as well as personally identifiable information of our customers and employees. The secure
processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information
technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.
Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
Any such access, disclosure or other loss of information could result in the loss of existing customers, difficulty in attracting new
customers, backlash from negative public relations, legal claims or proceedings, liability under laws that protect the privacy of personal
information, and regulatory penalties. Further, such access, disclosure or loss may cause disruption of our operations and the services
we provide to customers, damage to our reputation, and cause a loss of confidence in our products and services, which could adversely
affect our business.

 We have programs, processes and technologies in place
to prevent, detect, contain, respond to and mitigate security related threats and potential incidents. We undertake considerable ongoing
improvements to our systems, connected devices and information-sharing products in order to minimize vulnerabilities, in accordance with
industry and regulatory standards. Because the techniques used to obtain unauthorized access change frequently and can be difficult to
detect, anticipating, identifying or preventing these intrusions or mitigating them if and when they occur, may be challenging.

 If we fail to maintain an effective system
of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud and our
business may be harmed and our stock price may be adversely impacted.

 Effective internal controls over financial reporting
are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any inability to provide reliable financial
reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") requires management
to evaluate and assess the effectiveness of our internal control over financial reporting. In order to comply with the requirements of
the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our policies, procedures and internal
controls. If we fail to maintain the adequacy of our internal controls over financial reporting, we could be subject to litigation or
regulatory scrutiny and investors could lose confidence in the accuracy and completeness of our financial reports. If we fail to fully
comply with the requirements of the Sarbanes-Oxley Act or our management concludes that our internal controls over financial reporting
are not effective, our business may be harmed and our stock price may decline. In addition, because of its inherent limitations, internal
controls over financial reporting may not prevent or detect misstatements.

 Risks Related to Our Indebtedness

 Our indebtedness could adversely affect our
financial condition and prevent us from fulfilling our obligations.

 A significant portion of our future cash flow is
required to pay interest and principal on our outstanding indebtedness, and we may be unable to generate sufficient cash flow from operations,
or have future borrowings available, to enable us to repay our indebtedness or to fund other liquidity needs. Among other consequences,
this indebtedness could:

 require us to use a significant
 percentage of our cash flow from operations for debt service and the satisfaction of repayment
 obligations, and not for other purposes, such as funding working capital and capital expenditures
 or making future acquisitions;

 cause our interest expense to increase
 if there is a general increase in interest rates, because our indebtedness bears interest
 at floating rates;

 limit our flexibility in planning
 for or reacting to changes in our business and limit our ability to exploit future business
 opportunities; and

 cause us to be more highly leveraged
 than some of our competitors, which may place us at a competitive disadvantage.

 Our outstanding indebtedness is subject to
certain operating and financial covenants that restrict our business and financing activities and may adversely affect our cash flow
and our ability to operate our business.

 On April 17, 2024 (the "Closing
Date"), we, as borrower, entered into a term loan agreement with the subsidiary guarantors party thereto from time to time
(collectively, the "Guarantors"), CRG Servicing LLC as administrative agent and collateral agent (the
"Agent"), and the lenders party thereto from time to time (as amended from time to time, the "CRG Term Loan
Agreement"), providing for a senior secured term loan of up to $55.0 million (the "CRG Term Loan"). The CRG Term
Loan Agreement requires us and the Guarantors to maintain compliance with certain operating and financial covenants, which, among
other things, limit our and the Guarantors' ability to incur additional debt, grant or permit additional liens, make
investments and acquisitions above certain thresholds, merge or consolidate with others, dispose of assets, pay dividends and
distributions and enter into affiliate transactions, in each case, subject to certain exceptions.

 In addition, the CRG Term Loan Agreement requires us to maintain:

 liquidity in an amount which shall
 exceed the greater of (i) $3.0 million and (ii) to the extent we have incurred certain permitted
 debt, the minimum cash balance, if any, required of us by the creditors of such permitted
 debt; and

 annual minimum revenue of at least:
 (i) $60.0 million for the twelve-month period beginning on January 1, 2024 and ending on
 December 31, 2024, (ii) $75.0 million for the twelve-month period beginning on January 1,
 2025 and ending on December 31, 2025, (iii) $85.0 million for the twelve-month period beginning
 on January 1, 2026 and ending on December 31, 2026, (iv) $95.0 million for the twelve-month
 period beginning on January 1, 2027 and ending on December 31, 2027 and (v) $105.0 million
 during each twelve-month period beginning on January 1 of a given year thereafter.

 A breach of any of the covenants under the CRG Term
Loan Agreement, subject to certain cure periods, will result in an event of default. Any event of default under the CRG Term Loan Agreement
could cause all of our outstanding indebtedness to become immediately due and payable, and a default interest rate of up to an additional
4.0% per annum may be applied to the outstanding loan balance. If our indebtedness is accelerated, we cannot be certain that we will
have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness
on terms favorable to us or at all.

 Risks Related to Our Products and Our Product
Pipeline

 We rely on our research and development partners
to design, manufacture and supply certain products we have licensed for marketing. If we or one of our partners fails to perform adequately,
fulfill our needs, or comply with regulations, we may be required to incur significant costs or even be subject to enforcement actions.
We also may face significant delays in our product introductions and commercialization.

 While we expect to have the capability to develop
certain of our pipeline in-house, we do not currently own any facility that may be used as a manufacturing and processing facility, and
therefore rely on our research and development partners from whom we license most of the products we currently commercialize to design,
manufacture and supply certain of our products.

 We and our research and development partners responsible
for manufacturing certain of our products and their contract manufacturers are obliged to operate in accordance with FDA's current
good manufacturing practices ("cGMP"), current good tissue practices ("cGTP"), and the QSR, as applicable, as
well as other regulations applicable to medical product manufacturers. The manufacture of regulated medical products in compliance with
cGMP, cGTP, and the QSR, as applicable, requires significant expertise and capital investment, including the development of advanced
manufacturing techniques and process controls. Manufacturers of medical products often encounter difficulties in production, including
difficulties with production costs and yields, quality control, including product stability and quality assurance testing, shortages
of qualified personnel, as well as compliance with strictly enforced regulatory requirements, other federal and state regulatory requirements
and foreign regulations. If we or our research and development partners or their contract manufacturers were to encounter any of these
difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability to commercialize our
products would be jeopardized.

 We and the manufacturers of certain of our products
may be unable to comply with applicable FDA, state and foreign regulatory requirements. The FDA or similar foreign regulatory agencies
may also implement new standards at any time or change their interpretation and enforcement of existing standards for manufacture, packaging
or testing of regulated products. We have little control over the manufacturers' compliance with these regulations and standards.
Our failure or a failure of any of our current or future research and development partners or their contract manufacturers to establish
and follow cGMP, cGTP, and the QSR, as applicable, and to document their adherence to such practices may lead to significant delays in
obtaining marketing authorization of future products or the ultimate launch of products. Failure by us or our current or future partners
or manufacturers to comply with applicable regulations could also result in sanctions being imposed on us or our partners, including
fines, injunctions, civil penalties, failure of the government to grant marketing authorization, delays, suspension or withdrawal of
authorization, seizures or recalls of products, operating restrictions, and criminal prosecutions. If the safety of any product supplied
is compromised due to the manufacturers' failure to adhere to applicable laws or for other reasons, we may not be able to successfully
commercialize our products. Any of these factors could cause a delay of commercialization of our products, entail higher costs or impair
our reputation.

 Revenue generated from the sale of certain
products is dependent on license agreements with certain manufacturers, and the termination of any of these license agreements could
harm our business.

 We rely on license agreements with certain manufacturers
in order to sell certain of our products. Many of these license agreements are nonexclusive, and our license agreements generally have
a term between one and five years. The license agreements are subject to renewal; however, the manufacturers may determine not to renew
the agreements or to terminate the contracts pursuant to their terms. We cannot be certain that these license agreements will continue
to be available to us or will be available to us on reasonable terms. If any of these agreements are terminated, we may be unable to
reacquire the necessary license on satisfactory terms or at all. The loss of, or inability to maintain, any of these license agreements
could negatively impact our ability to sell our products, which could have a material adverse effect on our business, financial condition
and results of operations.

 Certain of our product candidates are still
under development, and we may not be able to successfully commercialize any of these product candidates.

 Our pipeline contains products and product candidates
for mitigation of opportunistic pathogens and biofilm, wound re-epithelialization and closure, necrotic tissue debridement, and cell
compatible substrates. We may also decide to develop other product candidates. Certain of our research and development programs are in
developmental stages. One or more of our product candidates may fail to meet safety and efficacy standards in human testing, even if
those product candidates are found to be effective in animal studies. To develop and commercialize product candidates, we must provide
the FDA and foreign regulatory authorities with human clinical and nonclinical animal data that demonstrate adequate safety and effectiveness.
To generate this data, we will have to subject our product candidates to significant additional research and development efforts, including
extensive nonclinical studies and clinical testing. Our approach to product discovery may not be effective or may not result in the development
of any product. It can take several years for a product to be approved and we may not be successful in bringing any therapeutic candidates
to the market. A new product candidate may appear promising at an early stage of development or after clinical trials and never reach
the market, or it may reach the market and not sell, for a variety of reasons. For example, the product may:

 be shown to be ineffective or to
 cause harmful side effects during preclinical testing or clinical trials;

 fail to receive regulatory approval
 on a timely basis or at all;

 be difficult to manufacture on a
 large scale;

 not be economically viable;

 not be prescribed by doctors or
 accepted by patients;

 fail to receive a sufficient level
 of reimbursement from government, insurers or other third-party payors; or

 infringe on intellectual property
 rights of any other party.

 If our delivery platform technologies or product
development efforts fail to generate product candidates that lead to the successful development and commercialization of products, or
if the product candidates we have (or may in the future) acquired are not approved or cleared for commercialization in the United States
or, otherwise experience adverse regulatory action, our business and financial condition will be materially adversely affected.

 Our future success will largely depend on our
ability to maintain and further grow clinical acceptance and adoption of our products, and we may be unable to adequately educate healthcare
practitioners on the use and benefits of our products.

 Healthcare practitioners play a significant role
in determining the course of a patient's treatment and, ultimately, the type of products, if any, that will be used to treat the
patient. As a result, our commercial success is dependent on our ability to educate practitioners on the use of our products in both
surgical and post-acute care settings. Acceptance and adoption of our products in our markets depends on educating healthcare practitioners
as to the distinctive characteristics, benefits, safety, clinical efficacy and cost-effectiveness of our products, including potential
comparisons to our competitors' products, and on training healthcare practitioners in the proper application of our products. If
we are not successful in convincing healthcare practitioners of the merits and advantages of our products compared to our competitors'
products, they may not use our products, and we will be unable to increase our sales and sustain growth or profitability.

 Convincing healthcare practitioners to dedicate the
time and energy necessary to properly train to use new products and techniques is challenging as healthcare practitioners may be hesitant
to change their medical practices, and we may not be successful in these efforts. If healthcare practitioners are not properly trained,
they may use our products ineffectively, resulting in unsatisfactory patient outcomes, negative publicity or lawsuits against us. Accordingly,
even if our products show superior benefits, safety or efficacy, based on head-to-head clinical trials, in comparison to alternative
treatments, our success will depend on our ability to gain and maintain market acceptance for our products. If we fail to do so, our
sales will not grow and our business, financial condition and results of operations will be adversely affected. We may not have adequate
resources to effectively educate the medical community, and our efforts may not be successful due to physician resistance or negative
perceptions regarding our products.

 Disruption of, or changes in, our distribution
model or customer base could harm our sales and margins.

 If we fail to manage the distribution of our products
properly, there may be a material adverse effect on our business. Furthermore, a change in the mix of our customers between service provider
and enterprise, or a change in the mix of direct and indirect sales, could adversely affect our business. Several factors could result
in disruption of or changes in our distribution model or customer base, which could harm our sales and margins. For instance, we compete
with some of our resellers through our direct sales, which may lead these channel partners to use other suppliers that do not compete
with them. In addition, some of our resellers may have insufficient financial resources and may not be able to withstand changes in business
conditions. If either of these situations were to occur, our reseller channels would weaken, which would result in a material adverse
effect on our business.

 Interruptions in the supply of our products
or inventory loss may adversely affect our business, financial condition and results of operations.

 Our products are manufactured using technically complex
processes requiring specialized facilities, highly specific raw materials and other production constraints. The complexity of these processes,
as well as strict company and government standards for the manufacture and storage of our products, subjects us to production risks.
In addition to ongoing production risks, process deviations or unanticipated effects of approved process changes may result in noncompliance
with regulatory requirements including stability requirements or specifications. Most of our products must be stored and transported
within a specified temperature range. For example, if environmental conditions deviate from that range, our products' remaining
shelf-lives could be impaired or their safety and efficacy could be adversely affected, making them unsuitable for use. These deviations
may go undetected. Severe weather conditions and natural disasters may make compliance with these processes and maintenance of these
standards more difficult, and climate change threatens more extreme weather events, which could increase our production risks. The occurrence
of actual or suspected production and distribution problems can lead to lost inventories, and in some cases recalls, with consequential
reputational damage and the risk of product liability. The investigation and remediation of any identified problems can cause production
delays and result in substantial additional expenses. Any unforeseen failure in the storage of our products or loss in supply could result
in a loss of our market share and negatively affect our revenues and operations.

 Failure of any third-party assessments to demonstrate
desired outcomes in proposed endpoints could have a negative impact on our business performance.

 Our collaborators regularly conduct clinical studies
designed to test a variety of endpoints associated with product performance and use across a number of applications. If a clinical study
conducted by us or our collaborators fails to demonstrate statistically significant results supporting performance, use benefits or compelling
health economic outcomes from using our products, physicians may elect not to use our products as a treatment for conditions that may
benefit from them. Furthermore, in the event of an adverse clinical study outcome, our products may not achieve "standard-of-care"
designations, where they exist, for the conditions in question, which could deter the adoption of our products. Also, if serious adverse
events are reported during the conduct of a study, it could affect continuation of the study, product marketing authorization by regulatory
authorities and product adoption by healthcare professionals or could cause regulatory authorities to impose other restrictions on the
product or require additional warning or precaution statements to appear on the product labeling. If we or our collaborators are unable
to develop a body of statistically significant evidence from our clinical studies, whether due to adverse results or the inability to
complete properly designed studies, public and private payors could refuse to cover our products, limit the manner in which they cover
our products, or reduce the price they are willing to pay or reimburse for our products.

 Increased prices for, or unavailability of,
raw materials used in our products could adversely affect our business, financial condition and results of operations.

 Our profitability is affected by the prices of the
raw materials used in the manufacture of our products. These prices may fluctuate based on a number of factors beyond our control, including
changes in supply and demand, general economic conditions, labor costs, fuel related delivery costs, competition, import duties, excises
and other indirect taxes, currency exchange rates, and government regulation. Due to the highly competitive nature of the healthcare
industry and the cost containment efforts of our customers and third-party payors, we may be unable to pass along cost increases for
key components or raw materials through higher prices to our customers. If the cost of key components or raw materials increases, and
we are unable fully to recover these increased costs through price increases or offset these increases through other cost reductions,
we could experience lower margins and profitability. Significant increases in the prices of raw materials that cannot be recovered through
productivity gains, price increases or other methods could adversely affect our business, results of operations and financial condition.

 Risks Related to Our THP Platform and Planned
Expansion into Value-Based Wound, Skincare and Other Services

 Our planned expansion into value-based wound,
skincare and other services could have a material adverse effect on our business, financial condition and results of operations.

 Our planned expansion into value-based wound, skincare
and other services subjects us to risks associated with the use of new and novel technologies, operational, financial, regulatory, legal
and reputational risks, as well as the risk that we may be unable to timely or successfully launch our service offerings. The success
of these operations depends upon our ability to commercialize our service offerings, and our failure to do so could negatively affect
our ability to generate revenue from these activities.

 Our planned expansion into value-based wound,
skincare and other services will require entrance into certain markets in which, in some cases, we have limited experience, which may
not be successful and could be costly.

 Our planned expansion into value-based wound, skincare
and other services will require entrance into certain markets in which we have limited experience. While we intend to expand our staff
with individuals with more experience in these markets and will closely scrutinize individuals we engage, we may not be able to retain
or continue to hire well-qualified and experienced individuals or our assessment of individuals we retain may not be accurate. As we
enter new markets, we will face new technological and operational risks and challenges with which we are unfamiliar and may incur significant
costs. Entering new markets requires substantial management efforts and skills to mitigate these risks and challenges. Our lack of experience
with certain of these new markets may result in unsuccessful new market entries. If we do not manage our entry into new markets properly,
these costs and risks could harm our business, financial condition or results of operations.

 Risks Related to Intellectual Property

 If we are unable to adequately protect our
intellectual property rights, we may not be able to compete effectively.

 Part of our success depends on our and our research
development partners' ability to protect proprietary rights to technologies used in certain of our products. We and our research
development partners rely on patents, copyrights, trademarks and trade secret laws to establish and maintain proprietary rights in our
technology and products. However, these legal means afford only limited protection and may not adequately protect our or our research
development partners' rights or permit us to gain or keep a competitive advantage. Patents and patent applications for the products
we have may not be sufficient or broad enough to prevent competitors from introducing similar products into the market. Our or our research
development partners' patents or attempts to enforce them may not be upheld by the courts and the damages or other remedies awarded
if we were to prevail in upholding such patents may not be commercially meaningful. Efforts to enforce any of our or our research development
partners' proprietary rights could be time-consuming and expensive, which could adversely affect our business and prospects and
divert management's attention. There can be no assurance that our or our research and development partners' proprietary rights
will not be challenged, invalidated or circumvented or that such rights will in fact provide competitive advantages to us.

 Furthermore, the issuance of a patent, while presumed
valid and enforceable, is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary
protection or competitive advantages against competitors with similar products. Competitors may also be able to design around our patents.
Other parties may develop and obtain patent protection for more effective technologies, designs or methods. In addition, we may not be
able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, vendors, former employees
and current employees.

 Patent rights are territorial, and patent protection
extends only to those countries where we have issued patents. Filing, prosecuting and defending patents on our products and product candidates
in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some
countries outside the United States could be less or more extensive than those in the United States, and their litigation processes differ.
Competitors may successfully challenge or avoid our patents or manufacture products in countries where we have not applied for patent
protection. Changes in the patent laws in the United States or other countries may diminish the value of our patent rights. As a result
of these and other factors, the scope, validity, enforceability, and commercial value of our and our research development partners'
patent rights are uncertain and unpredictable.

 The patent positions of life sciences companies,
including our and our research development partners' patent positions, involve complex legal and factual questions, and, therefore,
the issuance, scope, validity and enforceability of any patent claims that we and our research development partners may obtain cannot
be predicted with certainty. Patents, if issued, may be challenged, deemed unenforceable, invalidated, or circumvented. A third-party
may submit prior patents, or we may become involved in opposition, derivation, reexamination, inter partes review, post-grant review,
supplemental examination, or interference proceedings challenging our patent rights or the patent rights of our licensors or development
partners. The costs of defending or enforcing our proprietary rights in these proceedings can be substantial, and the outcome can be
uncertain. An adverse determination in any such submission or proceeding could reduce the scope of, or invalidate, our patent rights,
allow third parties to commercialize our technology or products and compete directly with us, or reduce our ability to manufacture or
commercialize products. Furthermore, if the scope or strength of protection provided by our patents and patent applications is threatened,
it could discourage companies from collaborating with us to license, develop or commercialize current or future products. The ownership
of our proprietary rights could also be challenged.

 Our and our research development partners'
ability to enforce our respective patent rights depends on the ability to detect infringement. It is difficult to detect infringers who
do not advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement
in a competitor's or potential competitor's product, particularly in litigation in countries other than the United States
that do not provide an extensive discovery procedure.

 CellerateRX Surgical is not currently protected
by any pending patent application or any unexpired patent. CellerateRX Surgical may be subject to competition from the sale of substantially
equivalent products that could adversely affect our business and operations.

 Our CellerateRX Surgical products, from which we
derive a substantial majority of our net revenue, have no patent protection, and therefore, in order to continue to obtain commercial
benefits from CellerateRX Surgical, we will rely on product manufacturing trade secrets, know-how and related nonpatent intellectual
property, such as potential regulatory rights that would require various resources to separately obtain. The effect of CellerateRX Surgical's
lack of patent protection depends, among other things, upon the nature of the market and the position of our products in the market from
time to time, the size of the market, the complexities and economics of manufacturing a competitive product and applicable regulatory
approval requirements. In the event that competition develops substantially equivalent products, this competition could have a material
adverse effect on our business, financial condition and operating results. Trade secret protection is effective only against wrongful
acquisition, use or disclosure of confidential information. A competitor can avoid a claim of trade secret misappropriation by showing
independent development without use of a trade secret owner's information, however, this typically requires some time, effort and
financial resources to develop independently. The entrance into the market of a product substantially equivalent to CellerateRX Surgical
may erode our product's market share, which may have a material adverse effect on our business, financial condition and results
of operations.

 We may be found to infringe on or violate the
intellectual property rights of others.

 We may not have identified all patents, published
applications or published literature that affect our business either by blocking our ability to commercialize our products or R&D
candidates, by preventing the patentability of one or more aspects of our products or R&D candidates to us or our licensors, or by
covering the same or similar technologies that may affect our ability to market our products and R&D candidates. For example, we
(or the licensor of a product or R&D candidate to us) may not have conducted a patent clearance search sufficient to identify potentially
obstructing third party patent rights. Moreover, patent applications in the United States are maintained in confidence for up to 18 months
after their filing. In some cases, however, patent applications remain confidential in the USPTO, for the entire time prior to issuance
as a U.S. patent. Patent applications filed in countries outside of the United States are not typically published until at least 18 months
from their first filing date. Similarly, publication of discoveries in the scientific or patent literature often lags behind actual discoveries.
We cannot be certain that we or our licensors were the first to invent, or the first to file, patent applications covering our products
and candidates. We also may not know if our competitors filed patent applications for technology covered by our pending applications
or if we were the first to invent the technology that is the subject of our patent applications. Competitors may have filed patent applications
or received patents and may obtain additional patents and proprietary rights that block or compete with our patents.

 Such third parties, including customers, may in the
future assert claims or initiate litigation related to exclusive patent, copyright, trademark and other intellectual property rights
to technologies and related standards that are relevant to us, our operations and our products. These assertions may emerge over time
as a result of our growth and the general increase in the pace of patent claim assertions, particularly in the United States. Because
of the existence of a large number of patents in the healthcare field, the secrecy of some pending patent applications and the rapid
rate of issuance of new patents, we believe that it is not economically practical or even possible to determine in advance whether a
product or any of its components is completely free of infringement of the patent rights of others even when we take reasonably objective
steps to determine that relevant patent rights might exist and, if so, to evaluate such patent rights relative to our proposed and actual
products and methods with patent counsel. The asserted claims or initiated litigation can include claims against us or our manufacturers,
suppliers or customers alleging infringement of their proprietary rights with respect to our existing or future products or components
of those products. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, intellectual
property litigation or claims could force us to cease developing, selling or otherwise commercializing one or more of our products; to
pay substantial damages for past use of the asserted intellectual property; to obtain a license from the holder of the asserted intellectual
property, which may not be available on reasonable terms, if at all; and redesign, or rename in the case of trademark claims, our product(s)
to avoid such third party rights, which may not be possible or which could be costly and time-consuming. Any of these risks coming to
fruition could have a material adverse effect on our business, results of operations, financial condition and prospects. Regardless of
the merit of these claims, they can be time-consuming, result in costly litigation and diversion of technical and management personnel,
or require us to develop a noninfringing technology or enter into license agreements. Where claims are made by customers, resistance
even to unmeritorious claims could damage customer relationships. There can be no assurance that licenses will be available on acceptable
terms and conditions, if at all, or that our indemnification by our suppliers will be adequate to cover our costs if a claim were brought
directly against us or our customers. Furthermore, because of the potential for high court awards that are not necessarily predictable
and the resources required to engage in a full defense of such allegations, it is not unusual to find even arguably unmeritorious claims
settled for significant amounts. If any infringement or other intellectual property claim made against us by any third party is successful,
or if we fail to develop noninfringing technology or license the proprietary rights on commercially reasonable terms and conditions,
our business could be materially and adversely affected.

 Risks Related to Regulations

 Our business is affected by numerous regulations
relating to the development, manufacture, distribution, labeling, marketing and sale of our products.

 Government regulation by the FDA and similar agencies
in other countries is a significant factor in the development, manufacturing and marketing of our products and in the acquisition or
licensing of new products. Complying with government regulations is often time consuming and expensive and may involve delays or actions
adversely impacting the marketing and sale of our current or future products.

 Following initial regulatory approval or clearance
of any products that we or our research and development partners may develop, we and/or our research and development partners will be
subject to continuing regulatory review, including, but not limited to:

 appropriate establishment registration
 and product listing requirements;

 FDA's cGMP, cGTP and QSR regulations,
 which govern the methods used in, and the facilities and controls used for, the design, manufacture,
 packaging, labeling, storage, installation, and servicing of finished devices, drugs and/or
 biologics, as applicable;

 FDA labeling requirements, which
 mandate the inclusion of certain content in medical product labels and labeling, and which
 also prohibit the promotion of products for uncleared or unapproved, i.e., "off-label,"
 indications;

 adverse event reporting regulations,
 which, generally, require applicable establishments (such as manufacturers and importers,
 among others) report to the FDA any adverse reactions, events, or experiences that meet the
 FDA's reporting thresholds for the given product type (e.g., under FDA's adverse-event
 reporting regulations under its device framework, adverse events must be reported if they
 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); and

 the Reports of Corrections and Removals
 regulation, which requires that manufacturers and importers report to the FDA corrective
 actions and product removals (both of which are defined under applicable regulations) that
 meet the definition of a "recall" if undertaken to reduce a risk to health posed
 by the product or to remedy a violation of the FDCA that may present a risk to health and
 that manufacturers and importers keep records of recalls that they determine to be not reportable.

 Failure to comply with applicable regulatory requirements
can result in, among other things, the FDA or other governmental authorities:

 imposing fines and penalties on
 us;

 preventing us from manufacturing
 or selling our products;

 delaying or denying pending applications
 for approval or clearance of our products or of new uses or modifications to our existing
 products, or withdrawing or suspending current approvals or clearances;

 ordering or requesting a recall
 of our products;

 issuing warning letters, untitled
 letters, or "It has Come to Our Attention" letters;

 imposing operating restrictions,
 including a partial or total shutdown of production or investigation of any or all of our
 products;

 refusing to permit to import or
 export of our products;

 detaining or seizing our products;

 obtaining injunctions preventing
 us from manufacturing or distributing any or all of our products;

 commencing criminal prosecutions
 or seeking civil penalties; and

 requiring changes in our advertising
 and promotion practices.

 In addition, private consumer and competitor litigation
tends to follow FDA enforcement actions and publications, such that a company that is targeted by FDA or another regulatory body is also
at an increased risk of facing civil litigation (often in the form of class actions).

 The manufacturing facilities we or our research and
development partners use (and may use) to make any of our FDA-regulated products are or may become subject to periodic review and inspection
by the FDA. If a previously unknown problem with a product or a manufacturing or laboratory facility used or contracted by us or one
of our research and development partners is discovered, the FDA may impose restrictions on that product or on the manufacturing facility,
including requiring us and/or our research and development partner to withdraw the product from the market. Any changes to an approved
or cleared product, including the way it is manufactured or promoted, often requires FDA review and separate approval or clearance before
the product, as modified, may be marketed. In addition, for products we develop in the future, we and our contract manufacturers may
be subject to ongoing FDA requirements for submission of safety and other post-market approval information. If we violate regulatory
requirements at any stage, whether before or after marketing approval or clearance is obtained, we may be fined, be forced to remove
a product from the market or experience other adverse consequences, which would materially harm our financial results. Additionally,
due to limitations imposed on us by the scope of the cleared or approved indications or intended use of our products and by FDA and Federal
Trade Commission ("FTC") regulations relating to promotional claims, we may not be able to obtain the labeling claims necessary
or desirable for product promotion.

 Distribution of our products outside the United States
is subject to extensive government regulation. These regulations, including the requirements for marketing authorizations or product
licenses necessary to bring a medical product to market, the time required for regulatory review and the sanctions imposed for violations,
vary from country to country. We do not know whether we will obtain the marketing authorizations or product licenses necessary to market
our products in such countries or that we will not be required to incur significant costs in obtaining or maintaining these regulatory
approvals.

 We are subject to various governmental regulations
relating to the labeling, marketing and sale of our products.

 Both before and after a product is commercially released,
we have ongoing responsibilities under regulations promulgated by the FDA, the FTC, and similar U.S. and foreign regulations governing
product labeling and advertising, distribution, sale and marketing of our products. Medical devices and biological products may only
be marketed or promoted for the uses and indications set forth in the approved or cleared product labeling. A number of enforcement actions
have been taken against companies that promoted products for "off-label" uses (i.e., uses that are not described in the approved
or cleared labeling), including actions alleging that claims submitted to government healthcare programs for reimbursement of products
that were promoted for "off-label" uses are fraudulent in violation of the Federal False Claims Act or other federal and
state statutes and that the submission of those claims was caused by off-label promotion. The failure to comply with prohibitions on
off-label promotion can result in significant monetary penalties, revocation or suspension of a company's business license, suspension
of sales of certain products, product recalls, civil or criminal sanctions, exclusion from participating in federal healthcare programs,
or other enforcement actions. In the United States, allegations of such wrongful conduct could also result in a corporate integrity agreement
with the U.S. government that imposes significant administrative obligations and costs.

 If we fail to obtain or experience significant
delays in obtaining regulatory clearances or approvals to market future medical device products, we will be unable to commercialize these
products until such clearance or approval is obtained.

 The developing, testing, manufacturing, marketing
and selling of medical devices is subject to extensive regulation by governmental authorities in the United States and other countries.
The process of obtaining regulatory clearance and approval of certain medical technology products is costly and time consuming. Inherent
in the development of new medical products is the potential for delay because product testing, including clinical evaluation, is typically
required, especially for drugs, biologics and high-risk devices, before such products can be approved for human use. With respect to
medical devices, such as those that we currently market, before a new medical device, or a new indicated use of, or claim for, an existing
product can be marketed (unless it is a Class I device), it must first receive either premarket clearance under Section 510(k) of the
FDCA or approval of a PMA from the FDA, or be reclassified and receive marketing authorization through the de novo classification process,
unless an exemption applies.

 In the 510(k)-clearance process, the FDA must determine
that the proposed device is "substantially equivalent" to a Class I or II device legally on the market, known as a "predicate"
device, with respect to intended use, technology, safety and effectiveness to clear the proposed device for marketing. Clinical data
is sometimes required to support substantial equivalence for certain device types. The PMA pathway requires an applicant to demonstrate
the safety and effectiveness of the device for its intended use based, in part, on extensive data including, but not limited to, technical,
preclinical, clinical trial, manufacturing and labeling data. The PMA process is typically required for devices that are deemed to pose
the greatest risk, such as life-sustaining, life-supporting or implantable devices. If a device is novel and there is no appropriate
predicate to which the applicant can demonstrate substantial equivalence, the device will be automatically classified as a Class III
device and require approval through the PMA process prior to commercialization, unless the applicant submits a de novo classification
request demonstrating that the novel device should be reclassified into Class I or II. Demonstrating that a novel device should be reclassified
to Class I or II from Class III typically requires extensive information and data on the benefits and risks of the device, including
performance data and frequently data from one or more clinical studies. The 510(k), PMA and de novo classification approval processes
can be expensive and lengthy.

 Failure to comply with applicable regulatory requirements
can result in, among other things, suspension or withdrawal of clearances or approvals, seizure or recall of products, injunctions against
the manufacture, holding, distribution, marketing and sale of a product and civil and criminal sanctions. Furthermore, changes in existing
regulations or the adoption of new regulations could prevent us from obtaining, or affect the timing of, future regulatory clearances
or approvals. Meeting regulatory requirements and evolving government standards may delay marketing of any new products developed by
us for a considerable period of time, impose costly procedures upon our activities and result in a competitive advantage to larger companies
that compete against us.

 The FDA or other regulatory agencies may not clear
or approve any products developed by us on a timely basis, or at all, or, if granted, clearance or approval may entail limiting the indicated
uses for which we may market the product, which could limit the potential market for any of these products.

 Delays in or changes to the FDA clearance and
approval processes or ongoing regulatory requirements could make it more difficult for us to obtain FDA clearance or approval of new
products or comply with ongoing requirements.

 New government regulations may be enacted and changes
in FDA policies and regulations and, their interpretation and enforcement, could prevent or delay regulatory clearance or approval of
new products. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation
or administrative action, either in the United States or abroad. Therefore, we do not know whether we or our research and development
partners will be able to continue to comply with such regulations or whether the costs of such compliance will have a material adverse
effect on our business. Changes could, among other things, require different labeling, monitoring of patients, interaction with physicians,
education programs for patients or physicians, curtailment of necessary supplies, or limitations on product distribution. These changes,
or others required by the FDA could have an adverse effect on our business, and specifically, on the sales of affected products. The
evolving and complex nature of regulatory science and regulatory requirements, the broad authority and discretion of the FDA and the
generally high level of regulatory oversight results in a continuing possibility that from time to time, we will be adversely affected
by regulatory actions despite ongoing efforts and commitment to achieve and maintain full compliance with all regulatory requirements.
If we or our research and development partners are not able to maintain regulatory compliance, we may not be permitted to market our
products and our business would suffer.

 Disruptions in the FDA and other government
agencies caused by leadership changes, funding shortages, or other legal or political pressures could hinder their ability to hire and
retain key personnel, provide regulatory clarity, or otherwise prevent new products and services from being developed or commercialized
in a timely manner or hinder our ability to continue marketing existing commercial products, which could negatively impact our business.

 The ability of the FDA to review and approve new
products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel
and accept the payment of user fees, and statutory, regulatory, and policy changes and other events that may otherwise affect the FDA's
ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, government
funding of other government agencies that fund research and development activities is subject to the political process, which is inherently
fluid and unpredictable.

 Further, the recent presidential election and congressional
seat turnover may result in increased regulatory and economic uncertainty, including the spending priorities of the new U.S. presidential
administration and Congress and what challenges budget reductions will present for us and our industry generally. For example, on January
20, 2025, President Trump announced an executive order establishing the "Department of Government Efficiency" to reform federal
government processes and reduce expenditures. Changes in federal policy by the executive branch and regulatory agencies may occur over
time through the new presidential administration's and/or Congress's policy and personnel changes, which could lead to changes
involving our industry. However, the nature and timing of such potential changes remain highly uncertain. At this time, it is unclear
whether and how any future changes or uncertainty surrounding future changes will adversely affect our business, but material adverse
effects are possible.

 Failure to obtain or maintain adequate reimbursement or insurance
coverage for our products could limit our ability to market those products and decrease our ability to generate revenue. Changes in reimbursement
policies and regulations by governmental or other third-party payors may have an adverse impact on the use of our products.

 The pricing, coverage, and reimbursement of our products,
if any, must be sufficient to support our commercial efforts and other development programs, and the availability and adequacy of coverage
and reimbursement by third-party payors, including governmental and private insurers, are essential for most patients to be able to afford
medical treatments. Sales of our products depend substantially, both domestically and abroad, on the extent to which the costs of our
products, if any, will be paid for or reimbursed by health maintenance, managed care, and similar healthcare management organizations,
or government payers and private payors. If coverage and reimbursement are not available, or are available only in limited amounts, we
may have to subsidize or provide medical products for free or we may not be able to successfully commercialize our products.

 A significant portion of our wound care products
are purchased principally for the Medicare and Medicaid eligible population by hospital outpatient clinics, wound care clinics, durable
medical equipment ("DME") suppliers and SNFs, which typically bill various third-party payors, primarily state and federal
healthcare programs (e.g., Medicare and Medicaid), and managed care plans, for the products and services provided to their patients.
Although the majority of our wound care products are currently eligible for reimbursement under Medicare Part B, adjustments to our reimbursement
amounts or a change in CMS's reimbursement policies could have an adverse effect on our market opportunities in this area. The
ability of our customers to obtain appropriate reimbursement for products and services from third-party payors is critical to the success
of our business because reimbursement status affects which products our customers purchase. In addition, our ability to obtain reimbursement
approval in foreign jurisdictions may affect our ability to expand our product offerings internationally.

 Third-party payors have adopted, and are continuing
to adopt, a number of policies intended to curb rising healthcare costs. These policies include the imposition of conditions of payment
by foreign, state and federal healthcare programs as well as private insurance plans, and the reduction in reimbursement amounts applicable
to specific products and services.

 Changes in healthcare systems in the United States
or internationally in a manner that significantly reduces reimbursement for procedures using our products or denies coverage for these
procedures would also have an adverse impact on the acceptance of our products and the prices which our customers are willing to pay
for them.

 Moreover, increasing efforts by governmental and
private payors in the United States and abroad to limit or reduce healthcare costs may result in restrictions on coverage and the level
of reimbursement for new medical products and, as a result, they may not cover or provide adequate payment for our products. We expect
to experience pricing pressures in connection with our products due to the increasing trend toward managed healthcare, including the
increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs
in general, and prescription drugs or biologics in particular, has and is expected to continue to increase in the future. As a result,
profitability of our current or future products may be more difficult to achieve.

 We rely on our research and development partners
to comply with applicable laws and regulations relating to product classification and when and what types of FDA marketing authorizations
are needed to lawfully commercialize a new or updated medical product in the United States.

 We rely on our research and development partners,
from whom we license most of the products we currently commercialize, to determine the appropriate classification for each such product
and to comply with applicable regulations related to obtaining the proper marketing authorization. With respect to each medical device
product we license, our respective research and development partner designs the product and determines whether the device should be classified
as a Class I, II, or III device and the appropriate FDA marketing authorization pathway to pursue (i.e., 510(k), PMA or de novo classification).
In addition, we rely on our research and development partners to determine whether specific legal or regulatory definitions or exemptions
apply to particular medical products, which individually may be subject to FDA oversight as a device, drug, biologic or human cellular
or tissue-based product. The FDA has broad regulatory authority to interpret and enforce the laws and regulations that govern medical
products in commercial distribution, and any adverse determination by the FDA relating to one of our licensed products could require
significant cost and effort to comply.

 Certain devices that we market under a license (or
that we have acquired or have, otherwise, obtained commercialization rights in the United States) have been updated or modified since
their initial 510(k) clearance. Depending on the nature of the updates or modifications made to a 510(k)-cleared device, the FDA may
require the submission (and clearance) of a new 510(k). More specifically, any modification that could significantly affect the cleared
device's safety or effectiveness, or that would constitute a significant change in its intended use, will require a new 510(k)
clearance. The FDA requires device manufacturers to make the initial determination as to whether a proposed modification to a cleared
device requires a new 510(k) submission, but the FDA can review any such decision not to submit a new 510(k) (if it becomes aware of
the modifications during an inspection or otherwise) and may disagree with the manufacturer's determination that the given modification(s)
did not require new clearance. If the FDA finds that a manufacturer has improperly marketed a modified device (for which the FDA has
determined that a new 510(k) is required) under the original device's 510(k), the FDA may mandate that the manufacturer cease marketing
and/or recall the modified device until the requisite clearance is obtained, in addition to one or more other enforcement actions. FDA
may disagree with our partners' decisions not to submit new 510(k) notifications for those of our 510(k)-cleared devices that have
been updated or modified since their initial clearance, in which case, we may be subject to a wide range of FDA enforcement actions,
including, but not limited to, warning letters, fines, and other penalties, and our business will be adversely affected, as we would
likely be required to cease commercialization (and, possibly, conduct a recall) of the modified product(s) at-issue and may incur additional
expenses in connection with the preparation and submission of a new 510(k).

 We and our employees and contractors are subject,
directly or indirectly, to federal, state and foreign healthcare fraud and abuse laws, including false claims laws. If we are unable
to comply, or have not fully complied, with such laws, we could face substantial penalties.

 Our operations are subject to various federal, state
and foreign fraud and abuse laws. These laws may affect our operations, including the financial arrangements and relationships through
which we market, sell and distribute our products. U.S. federal and state laws that affect our ability to operate include, but are not
limited to:

 the federal Anti-Kickback Statute,
 which prohibits, among other things, persons or entities from knowingly and willfully soliciting,
 receiving, offering or paying any remuneration (including any kickback, bribe, or rebate),
 directly or indirectly, overtly or covertly, in cash or in kind in return for, the purchase,
 recommendation, leasing or furnishing of an item or service reimbursable under a federal
 healthcare program, such as the Medicare and Medicaid programs;

 federal civil and criminal false
 claims laws and civil monetary penalty laws, which prohibit, among other things, individuals
 or entities from knowingly presenting, or causing to be presented, claims for payment or
 approval from Medicare, Medicaid, or other government payors that are false or fraudulent;

 Section 242 of HIPAA codified at
 18 U.S.C. § 1347, which created new federal criminal statutes that prohibit a person
 from knowingly and willfully executing a scheme or from making false or fraudulent statements
 to defraud any healthcare benefit program (i.e., public or private);

 federal transparency laws, including
 the so-called federal "sunshine" law, which requires the tracking and disclosure
 to the federal government by pharmaceutical and medical device manufacturers of payments
 and other transfers of value to physicians and teaching hospitals as well as ownership and
 investment interests that are held by physicians and their immediate family members; and

 state law equivalents of each of
 these federal laws, such as anti-kickback and false claims laws that may apply to items or
 services reimbursed by any third-party payer, including commercial insurers, state laws that
 require pharmaceutical and medical device companies to comply with their industry's
 voluntary compliance guidelines and the applicable compliance guidance promulgated by the
 federal government or otherwise restrict certain payments that may be made to healthcare
 providers and other potential referral sources, state laws that require drug and medical
 device manufacturers to report information related to payments and other transfers of value
 to physicians and other healthcare providers or marketing expenditures, state laws that prohibit
 giving gifts to licensed healthcare professionals and state laws governing the privacy and
 security of health information in certain circumstances, many of which differ from each other
 in significant ways and may not have the same effect, thus complicating compliance efforts
 in certain circumstances, such as specific disease states.

 In particular, activities and arrangements in the
healthcare industry are subject to extensive laws and regulations intended to prevent fraud, waste and other abusive practices. These
laws and regulations may restrict or prohibit a wide range of activities or other arrangements related to the development, marketing
or promotion of products, including pricing and discounting of products, provision of customer incentives, provision of reimbursement
support, other customer support services, provision of sales commissions or other incentives to employees and independent contractors
and other interactions with healthcare practitioners, other healthcare providers and patients.

 Because of the breadth of these laws and the narrow
scope of the statutory or regulatory exceptions and safe harbors available, our business activities could be challenged under one or
more of these laws. Relationships between medical product manufacturers and health care providers are an area of heightened scrutiny
by the government. We engage in various activities, including the conduct of speaker programs to educate physicians, the provision of
reimbursement advice and support to customers, and the provision of customer and patient support services, that have been the subject
of government scrutiny and enforcement action within the medical device industry.

 Government expectations and industry best practices
for compliance continue to evolve and past activities may not always be consistent with current industry best practices. Further, there
is a lack of government guidance as to whether various industry practices comply with these laws, and government interpretations of these
laws continue to evolve, all of which create compliance uncertainties. Any noncompliance could result in regulatory sanctions, criminal
or civil liability and serious harm to our reputation. Although we have a comprehensive compliance program designed to ensure that our
employees' and commercial partners' activities and interactions with healthcare professionals and patients are appropriate,
ethical, and consistent with all applicable laws, regulations, guidelines, policies and standards, it is not always possible to identify
and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in preventing such conduct,
mitigating risks, or reducing the chance of governmental investigations or other actions or lawsuits stemming from a failure to comply
with these laws or regulations.

 If a government entity opens an investigation into
possible violations of any of these laws (which may include the issuance of subpoenas), we would have to expend significant resources
to defend ourselves against the allegations. Allegations that we, our officers, or our employees violated any one of these laws can be
made by individuals called "whistleblowers" who may be our employees, customers, competitors or other parties. Government
policy is to encourage individuals to become whistleblowers and file a complaint in federal court alleging wrongful conduct. The government
is required to investigate all of these complaints and decide whether to intervene. If the government intervenes and we are required
to pay damages, which in such cases are typically set at three times the actual monetary damages, to the government, the whistleblower,
as a reward, is awarded a percentage of such damages or any settlement amount. If the government declines to intervene, the whistleblower
may proceed on their own and, if they are successful, they will receive a percentage of any judgment or settlement amount the company
is required to pay. The government may also initiate an investigation on its own. If any such actions are instituted against us, those
actions could have a significant impact on our business, including the imposition of significant fines, and other sanctions that may
materially impair our ability to run a profitable business. In particular, if our operations are found to be in violation of any of the
laws described above or if we agree to settle with the government without admitting to any wrongful conduct or if we are found to be
in violation of any other governmental regulations that apply to us, we, our officers and employees may be subject to sanctions, including
civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid,
imprisonment, the curtailment or restructuring of our operations and the imposition of a corporate integrity agreement, any of which
could adversely affect our business, results of operations and financial condition.

 We and our research and development partners'
use of PII, including health information, is subject to federal and state privacy and security regulations, and our failure
to comply with those regulations or to adequately secure the information we hold could have a material adverse effect on our client base,
business, financial condition and results of operations.

 Numerous state and federal laws and regulations,
including HIPAA, govern the collection, dissemination, use, privacy, confidentiality, security, availability and integrity of PII, including
protected health information. HIPAA establishes a set of basic national privacy and security standards for the protection of PHI by health
plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with
whom such covered entities contract for services, which likely includes us. HIPAA requires healthcare providers and business associates
to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative,
physical, and technical safeguards to protect such information. HIPAA also implemented the use of standard transaction code sets and
standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including
activities associated with the billing and collection of healthcare claims. HIPAA imposes mandatory penalties for certain violations.
HIPAA also authorizes each state's Attorney General to file suit on behalf of their residents. Courts will be able to award damages,
costs and attorneys' fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing
individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil
suits such as those for negligence or recklessness in the misuse or breach of PHI.

 In addition, HIPAA mandates that the Secretary of
HHS conduct periodic compliance audits of HIPAA covered entities or business associates for compliance with the HIPAA Privacy and Security
Standards. HIPAA further requires that patients be notified of any unauthorized acquisition, access, use or disclosure of their unsecured
PHI that compromises the privacy or security of such information, with certain exceptions related to unintentional or inadvertent use
or disclosure by employees or authorized individuals. HIPAA specifies that such notifications must be made without unreasonable delay
and in no case later than 60 calendar days after discovery of the breach. If a breach affects 500 patients or more, it must be reported
to HHS without unreasonable delay, and HHS will post the name of the breaching entity on its public web site. Breaches affecting 500
patients or more in the same state or jurisdiction must also be reported to the local media. If a breach involves fewer than 500 people,
the covered entity must record it in a log and notify HHS at least annually.

 Numerous other federal and state laws protect the
confidentiality, privacy, availability, integrity and security of PII, including PHI. These laws in many cases are more restrictive than,
and may not be preempted by, the HIPAA rules and may be subject to varying interpretations by courts and government agencies, creating
complex compliance issues for us and our clients and potentially exposing us to additional expense, adverse publicity and liability.
In addition, new health information standards, whether implemented pursuant to HIPAA, congressional action or otherwise, could have a
significant effect on the manner in which we must handle healthcare related data, and the cost of complying with standards could be significant.
If we do not comply with existing or new laws and regulations related to PHI, we could be subject to criminal or civil sanctions.

 Because of the extreme sensitivity of the PII we
or our partners may store and transmit, the security features of our technology platforms are very important. If our security measures,
some of which may be managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive client
and patient data, including HIPAA-regulated PHI. As a result, our reputation could be severely damaged, adversely affecting client or
investor confidence. Clients may curtail their use of or stop using our products and services, which would cause our business to suffer.
In addition, we could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and other
applicable laws or regulations and significant costs for remediation, notification to individuals and for measures to prevent future
occurrences. Any potential security breach could also result in increased costs associated with liability for stolen assets or information,
repairing system damage that may have been caused by such breaches, incentives offered to client or other business partners in an effort
to maintain our business relationships after a breach and implementing measures to prevent future occurrences, including organizational
changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants.
While we maintain insurance covering certain security and privacy damages and claim expenses, our coverage may not be sufficient to compensate
for all liability.

 Our officers, employees, independent contractors,
principal investigators, consultants and commercial partners may engage in misconduct or activities that are improper under other laws
and regulations, which would create liability for us.

 We are exposed to the risk that our officers, employees,
independent contractors (including contract research organizations ("CROs")), principal investigators, consultants and commercial
partners may engage in fraudulent conduct or other illegal activity and/or may fail to disclose unauthorized activities to us. Misconduct
by these parties could include, but is not limited to, intentional, reckless and/or negligent failures to comply with:

 the laws and regulations of the
 FDA and its foreign counterparts requiring, among other things, compliance with good manufacturing
 practice and/or quality system requirements, post-market vigilance reporting, product marketing
 authorization requirements, facility registration requirements, the reporting of true, complete
 and accurate information to such regulatory bodies, including but not limited to safety problems
 associated with the use of our products;

 laws and regulations of the FDA
 and its foreign counterparts concerning the conduct of clinical trials and the protection
 of human research subjects, including but not limited to good clinical practices;

 other laws and regulations of the
 FDA and its foreign counterparts relating to the manufacture, processing, packing, holding,
 investigating or distributing in commerce of medical devices, biological products and/or
 HCT/Ps;

 manufacturing standards we have
 established; or

 healthcare fraud and abuse laws,
 including but not limited to, the Anti-Kickback Statute, the Stark Law, the FCA, and state
 law equivalents.

 In particular, companies involved in the manufacture
of medical products are subject to laws and regulations intended to ensure that medical products that will be used in patients are safe
and effective, and, specifically, that they are not adulterated or misbranded, that they are properly labeled, and have the identity,
strength, quality and purity that which they are represented to possess. Further, companies involved in the research and development
of medical products are subject to extensive laws and regulations intended to protect research subjects and ensure the integrity of data
generated from clinical trials and of the regulatory review process. Any misconduct in any of these areas, whether by our own employees
or by contractors, vendors, business associates, consultants, or other entities acting as our agents, could result in regulatory sanctions,
criminal or civil liability and serious harm to our reputation. Although we have a comprehensive compliance program designed to ensure
that our employees', CRO partners', principal investigators', consultants', and commercial partners' activities
and interactions with healthcare professionals and patients are appropriate, ethical, and consistent with all applicable laws, regulations,
guidelines, policies and standards, it is not always possible to identify and deter misconduct, and the precautions we take to detect
and prevent this activity may not be effective in preventing such conduct, mitigating risks, or reducing the chance of governmental investigations
or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against
us, or our CRO partners, principal investigators, consultants, or commercial partners, those actions could have a significant impact
on our business, including the imposition of significant fines, and other sanctions that may materially impair our ability to run a profitable
business.

 We could be adversely affected if healthcare
reform measures substantially change the market for medical care or healthcare coverage in the United States.

 Third party payors, governmental authorities, and
other applicable stakeholders have developed, and are continuing to develop, increasingly sophisticated methods of controlling healthcare
costs. In both the United States and certain foreign jurisdictions, there have been numerous legislative and regulatory changes to the
healthcare system that could impact our ability to sell our products profitably. In particular, the Affordable Care Act was enacted in
the United States in 2010, and various analogous or similarly intended state laws, as well as a number of executive, legislative, and
judicial challenges have followed in the years since. There remains substantial uncertainty and continued evolution with regard to healthcare
reform measures, and we cannot predict the effect that any current or future such measure will have on our business. Complying with any
new or amended legislation, policies, rulings, or other relevant healthcare cost-containment and/or transparency requirements may be
time-intensive and expensive, which could have a material adverse effect on our business.

 There have been, and likely will continue to be,
legislative and regulatory proposals at the foreign, federal and state levels directed at containing or lowering the cost of healthcare.
We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed
care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may
adversely affect the demand for some or all of the products we currently market or may commercialize in the future, if any, including:
our ability to receive or set a price that we believe is fair for our products; our ability to generate revenue and achieve or maintain
profitability; the level of taxes that we are required to pay; and the availability of capital. We expect that existing healthcare reform
legislation, and any similar measures implemented in the future, will result in additional reductions in Medicare and other healthcare
funding, more rigorous coverage criteria, lower reimbursement, and new payment methodologies. This could lower the prices that we are
able to charge or receive for our products and/or may create additional challenges in relation to reimbursement/coverage. Any denial
in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction
in payments from private payors, which may prevent us from being able to generate sufficient revenue, attain profitability or commercialize
our product candidates, if approved.

 Defects, failures or quality issues associated
with our products could lead to product recalls or safety alerts, adverse regulatory actions, product liability lawsuits and other litigation
and negative publicity that could materially adversely affect our reputation, business, results of operations and financial condition.

 Quality is extremely important to us and our customers
due to the serious and costly consequences of product failure. Quality and safety issues may occur with respect to any of our products,
and our future operating results will depend on our ability to maintain an effective quality control system and effectively train and
manage our workforce with respect to our quality system. The development, manufacture and control of medical products are subject to
extensive and rigorous regulation by numerous government agencies, including the FDA and similar foreign agencies. Compliance with these
regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA and foreign
regulatory authorities. The FDA and foreign regulatory authorities may also require post-market testing and surveillance to monitor the
performance of products cleared or approved for use in their jurisdictions. Our manufacturing facilities and those of our suppliers and
independent sales agencies are also subject to periodic regulatory inspections. If the FDA or other regulatory authority were to conclude
that we or our suppliers have failed to comply with any of these requirements, it could institute a wide variety of enforcement actions,
ranging from a public warning letter to more severe sanctions, such as product recalls or seizures, withdrawals, monetary penalties,
consent decrees, injunctive actions to halt the manufacture or distribution of products, import detentions of products made outside the
United States, export restrictions, restrictions on operations or other civil or criminal sanctions. Civil or criminal sanctions could
be assessed against our officers, employees, or us. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively
manufacturing, marketing, and selling our products.

 Relatedly, although we have contractual indemnity
from the manufacturers of our current products for certain liability claims related to their production, we could face product liability
lawsuits or other similar proceedings relating to actual or alleged injuries, defects, deficiencies, failures, and/or representations
relating to our products that could fall outside of the scope of the contractual indemnities. We do not have, and do not anticipate obtaining,
contractual indemnification from parties supplying raw materials or parties marketing the products we sell. In any event, indemnification
from the manufacturers of our products or from any other party is limited by the terms of the indemnity and by the creditworthiness of
the indemnifying party. A successful product liability or other applicable claim or series of claims brought against us could result
in judgments, fines, damages and liabilities that could have a material adverse effect on our business. We may incur significant expense
investigating and defending these claims, even if they do not result in liability. Moreover, even if no judgments, fines, damages or
liabilities are imposed on us, our reputation could suffer as result of any such claim, which could have a material adverse effect on
our business.

 Product liability insurance for the healthcare industry
may become prohibitively expensive, to the extent it is available at all. We may not be able to maintain such insurance on acceptable
terms or be able to secure increased coverage as commercialization of our products progresses, nor can we be sure that existing or future
claims against us will be covered by our product liability insurance. In the event that we do not have adequate insurance or contractual
indemnification, product liability claims relating to defective products could have a material adverse effect on our business.

 In addition, we cannot predict the results of future
legislative activity or future court decisions, any of which could increase regulatory requirements, subject us to government investigations
or expose us to unexpected litigation. Any regulatory action or litigation, regardless of the merits, may result in substantial costs,
divert management's attention from other business concerns and place additional restrictions on our sales or the use of our products.
In addition, negative publicity, including regarding a quality or safety issue, could damage our reputation, reduce market acceptance
of our products, cause us to lose customers and decrease demand for our products. Any actual or perceived quality issues may also result
in issuances of physician's advisories against our products or cause us to conduct voluntary recalls. Any product defects or problems,
regulatory action, litigation, negative publicity or recalls could disrupt our business and have a material adverse effect on our business,
results of operations and financial condition.

 Risks Related to Ownership of Our Common Stock

 It is possible that we will require additional
capital to meet our financial obligations and support business growth, and this capital might not be available on acceptable terms or
at all.

 We intend to continue to make significant investments
to support our business growth and expect to require additional funds to respond to business challenges. Accordingly, we may need to
engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible
debt securities, our existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights,
preferences and privileges superior to those of holders of our common stock. Any debt financing that we secure in the future could involve
restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more
difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able
to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms
satisfactory to us when and if we require it, our ability to continue to support our business growth and to respond to business challenges
could be significantly impaired, and our business may be harmed.

 The trading price of the shares of our common
stock is highly volatile, and purchasers of our common stock could incur substantial losses.

 The market price of our common stock has been and
is likely to continue to be highly volatile and could fluctuate widely in response to various factors, many of which are beyond our control,
including the following:

 technological innovations or new
 products and services by us or by our competitors, including announcements by us or our competitors
 of significant contracts, acquisitions, strategic partnerships or capital commitments;

 additions or departures of key personnel;

 changes in expectations as to our
 future financial performance;

 sales of our common stock;

 our ability to execute our business
 plan;

 loss of any strategic relationship;

 industry developments;

 changes in financial estimates by
 any securities analysts who follow our common stock, our failure to meet these estimates
 or failure of those analysts to initiate or maintain coverage of our common stock;

 general market conditions, including
 market volatility and inflation;

 fluctuations in stock market prices
 and trading volumes of similar companies;

 economic, political and other external
 factors;

 period-to-period fluctuations in
 our financial results;

 applicable regulatory developments
 in the United States and foreign countries, both generally or specific to us and our products;
 and

 intellectual property, product liability
 or other litigation against us.

 Although publicly traded securities are subject to
price and volume fluctuations, it is likely that our common stock will experience these fluctuations to a greater degree than the securities
of more established and better capitalized organizations.

 Our common stock does not have a vigorous trading
market, and you may not be able to sell your securities at or near ask prices, or at all.

 Although there is a public market for our common
stock, trading volume has been historically low, which could impact our stock price and your ability to sell shares of our common stock
at or near ask prices, or at all. We can give no assurance that a more active and liquid public market for the shares of our common stock
will develop in the future.

 The potential sale of large amounts of common
stock may have a negative effect upon the market value of our shares.

 Sales of a significant number of shares of our common
stock in the public market or the perception that these sales might occur could harm the market price of our common stock and make it
more difficult for us to raise funds through future offerings of common stock. As additional shares of our common stock become available
for resale in the public market, the supply of our common stock will increase, which could decrease the price of our common stock.

 We have not paid, and we are unlikely to pay
in the near future, cash dividends on our securities. Because we have no plans to pay cash dividends on our common stock for the foreseeable
future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for
it.

 We have not paid and do not currently intend to pay
dividends on our common stock, which may limit the current return available on an investment in our stock. Future dividends on our stock,
if any, will depend on our future earnings, capital requirements, financial condition and such other factors as our management may consider
relevant. Currently, we intend to retain earnings, if any, to increase our net worth and reserves. Consequently, shareholders will only
realize an economic gain on their investment in our common stock if the price appreciates. Shareholders should not purchase our common
stock expecting to receive cash dividends. Because we currently do not pay dividends, and there may be limited trading in our common
stock, shareholders may not have any manner to liquidate or receive any payment on their common stock. Therefore, our failure to pay
dividends may cause shareholders to not see any return on their common stock even if we are successful in our business operations. In
addition, because we do not pay dividends, we may have trouble raising additional funds, which could affect our ability to expand our
business operations.

 A few of our existing shareholders own a large
percentage of our voting stock and have control over matters requiring shareholder approval and may delay or prevent a change in control
or otherwise lead to actual or potential conflicts of interest.

 As of March 18, 2025, our directors beneficially
owned, including through their affiliates, approximately 41% of our outstanding common stock. As a result, our directors and their
affiliates could have the ability to exert substantial influence over all matters requiring approval by our shareholders, including (i)
the election and removal of directors, (ii) any proposed merger, consolidation or sale of all or substantially all of our assets as well
as other corporate transactions and (iii) any amendment to our Amended and Restated Certificate of Formation (the "Certificate
of Formation"). This concentration of control could be disadvantageous to other shareholders having different interests. This significant
concentration of share ownership may adversely affect the trading price for our common stock because investors sometimes perceive disadvantages
in owning stock in companies with controlling shareholders.

 In addition, our Certificate of Formation contains
a provision which under the Texas Business Organizations Code (the "TBOC") could allow the shareholders who own a majority
of our common stock to approve certain major transactions without the approval of other shareholders that otherwise would be required
under Texas corporation law.

 Our Certificate of Formation includes provisions
limiting the personal liability of our directors for breaches of fiduciary duties under Texas law.

 Our Certificate of Formation contains a provision
eliminating a director's personal liability for acts or omissions in the director's capacity as a director to the fullest
extent permitted under Texas law. Pursuant to the TBOC, a corporation has the power to indemnify its directors and officers against judgments
and certain expenses other than judgments that are actually and reasonably incurred in connection with a proceeding, provided that there
is a determination that the individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe the individual's conduct was
unlawful. However, no indemnification may be made in respect of any proceeding in which such individual is liable to the corporation
or improperly received a personal benefit and is found liable for willful misconduct, breach of the duty of loyalty owed to the corporation,
or an act or omission deemed not to be committed in good faith.

 The principal effect of the limitation on liability
provision is that a shareholder will be unable to prosecute an action for monetary damages against a director unless the shareholder
can demonstrate a basis for liability for which indemnification is not available under the TBOC. The inclusion of this provision in our
Certificate of Formation may discourage or deter shareholders or management from bringing a lawsuit against directors for a breach of
their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our shareholders.

 Texas law, our Certificate of Formation and
our Amended and Restated Bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that shareholders may
consider favorable.

 Under our Certificate of Formation, our board of
directors can authorize the issuance of preferred stock, which could diminish the rights of holders of our common stock and make a change
of control of the Company more difficult even if it might benefit our shareholders. The board of directors is authorized to issue shares
of preferred stock in one or more series and to fix the voting powers, preferences and other rights and limitations of the preferred
stock. Accordingly, we may issue shares of preferred stock with a preference over our common stock with respect to dividends or distributions
on liquidation or dissolution, or that may otherwise adversely affect the voting or other rights of the holders of common stock. Issuances
of preferred stock, depending upon the rights, preferences and designations of the preferred stock, may have the effect of delaying,
deterring or preventing a change of control, even if that change of control might benefit our shareholders.

 In addition, provisions of our Certificate of Formation
and our Amended and Restated Bylaws ("Bylaws") may delay or discourage transactions involving an actual or potential change
in our control or change in our management, including transactions in which shareholders might otherwise receive a premium for their
shares, or transactions that our shareholders might otherwise deem to be in their best interests. For example, our Certificate of Formation
and Bylaws (i) do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock
entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose), (ii) require
that special meetings of the shareholders be called by the Chairman of the board of directors, the President or the board of directors,
or by the holders of not less than twenty-five percent (25%) of all the shares issued, outstanding and entitled to vote, (iii) permit
our board of directors to alter, amend or repeal our Bylaws or to adopt new bylaws, and (iv) enable our board of directors to increase
the number of persons serving as directors and to fill vacancies created as a result of the increase by a majority vote of the directors
present at a meeting of directors.

 While we are subject to the provisions of Title 2,
Chapter 21, Subchapter M of the TBOC, which provides that a Texas corporation that qualifies as an "issuing public corporation"
(as defined in the TBOC) may not engage in specified types of business combinations, including mergers, consolidations and asset sales,
with a person, or an affiliate or associate of that person, who is an "affiliated shareholder," the restrictions in Title
2, Chapter 21, Subchapter M of the TBOC do not apply to us because we have elected, in the manner provided under the TBOC, not to be
subject to such provisions.

 Our failure to meet the continued listing requirements
of The Nasdaq Capital Market could result in a delisting of our common stock.

 Our shares of common stock are currently listed for
trading on The Nasdaq Capital Market under the symbol "SMTI." If we fail to satisfy the continued listing requirements of
The Nasdaq Stock Market, LLC ("Nasdaq"), such as the corporate governance requirements, the shareholder's equity requirement
or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock. Such a delisting or even notification
of failure to comply with such requirements would likely have a negative effect on the price of our common stock and would impair our
shareholders' ability to sell or purchase our common stock when our shareholders wish to do so. In the event of a delisting, we
expect that we would take actions to restore our compliance with Nasdaq's listing requirements, but we can provide no assurance
that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity
of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future noncompliance
with Nasdaq's listing requirements.

 ITEM 1B. UNRESOLVED STAFF
COMMENTS

 Not applicable.

 ITEM 1C. CYBERSECURITY

 We recognize the critical importance of cybersecurity
in safeguarding sensitive information and maintaining operational resilience. We have processes for assessing, identifying and managing
cybersecurity risks, which are built into our information technology function and are designed to help protect our information assets
and operations from internal and external cyber threats, protect employee and customer information from unauthorized access or attack,
as well as secure our networks and systems.

 The audit committee of the board of directors (the
"Audit Committee") is responsible for overseeing cybersecurity risk and periodically updates our board of directors on such
matters. The Audit Committee receives periodic updates from management regarding cybersecurity matters and is notified between such updates
regarding any significant new cybersecurity threats or incidents.

 As a company, we leverage the National Institute
of Standards and Technology (NIST) Cybersecurity Framework to align with industry best practices and to develop policies and procedures,
which include a Cybersecurity Response Plan focusing on detection, validation, mitigation, recovery, and refinement. In addition to the
Cybersecurity Response Plan, we provide cybersecurity awareness training to our employees, including training on social engineering,
phishing, password protection, confidential data protection, mobile security, and incident reporting, to help prevent and reduce the
impact of potential cybersecurity events.

 We have strategically invested resources and tools
to combat the ever-changing cyber threat landscape. These investments include growing our internal technology team headcount and bolstering
our partnerships with entities with external expertise, resulting in increased protection, monitoring, and response capabilities. We
have also made investments to carry cybersecurity insurance that provides additional protection and resources to reduce a cybersecurity
event's impact and potential losses.

 Our technology and management teams meet regularly
with key internal and external stakeholders to review cybersecurity concerns and areas for continued focus and improvement.

 We face risks from cybersecurity threats that could
have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation. To date, we have
not experienced any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially
affected or are reasonably likely to materially affect our business strategy, financial condition, results of operations, or cash flows.
See "Risk Factors – Risks Related to Our Business – Security breaches and other disruptions could compromise our information
and expose us to liability, which would cause our business and reputation to suffer."

 ITEM 2. PROPERTIES

 We do not own any buildings or other real property.
As of December 31, 2024, our leased office space in Fort Worth, Texas consisted of approximately 11,414 square feet of rentable space located in Summit Office
Park, a twin-building, mid-rise, 242,000 square foot office park located on the perimeter of the Fort Worth central business district.
In March and September of 2023, we amended our primary office lease to obtain additional space, as well as to extend the lease term.
The lease had a remaining lease term of 72 months as of December 31, 2024. In March 2025, we increased our lease office space in
Fort Worth, Texas by approximately 3,900 square feet.

 Our leased office space in San Antonio, Texas
consists of approximately 7,289 square feet of rentable space located in a 14,500 square foot office park in an industrial district
in San Antonio, Texas. This lease had a remaining lease term of eight months as of December 31, 2024. We are currently evaluating
our renewal options for this lease.

 Our leased office space in Orlando, Florida
represents a lease we assumed in connection with our acquisition of Scendia Biologics, LLC. The lease consists of approximately 7,684 square feet
in a 22,947 square foot office building. However, we are co-tenants in the lease with an unaffiliated company with our share of the
lease being agreed to as 40% or approximately 3,074 square feet. The lease had a remaining term of two months as of
December 31, 2024 and was not renewed.

 We periodically enter into operating lease contracts
for office space and equipment. Arrangements are evaluated at inception to determine whether such arrangements constitute a lease. In
accordance with the transition guidance of Accounting Standards Codification Topic No. 842, such arrangements are included in our balance
sheet.

 See Note 7 to the consolidated financial statements
for additional information on our operating leases.

 ITEM 3. LEGAL PROCEEDINGS

 From time to time, we may be involved in claims and
legal actions that arise in the ordinary course of business. To our knowledge, there are no material pending legal proceedings to which
we are a party or of which any of our property is the subject.

 ITEM 4. MINE SAFETY DISCLOSURES

 This item is not applicable.

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Our common stock is traded on The Nasdaq Capital
Market under the trading symbol "SMTI." The closing price of our common stock as reported by Nasdaq on March 18, 2025,
was $33.64.

 Record Holders

 As of March 18, 2025, there were 310 shareholders
of record and there were 8,901,903 shares of common stock issued and outstanding. The number of shareholders of record does not reflect
the number of persons or entities who held stock in nominee or street name through various brokerage firms.

 Dividends

 We have never declared or paid any cash dividends
on our common stock, and we do not intend to pay cash dividends in the foreseeable future. We currently expect to retain any future earnings
to fund our operations and the expansion of our business.

 Recent Sales of Unregistered Securities

 There were no sales of unregistered securities during
the year ended December 31, 2024 that were not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form
8-K.

 Issuer Purchases of Equity Securities

 We did not repurchase any of our equity securities
during the fourth quarter of the fiscal year ended December 31, 2024.

 ITEM 6. RESERVED

 ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The following discussion and analysis contains forward-looking
statements about future revenues, operating results, plans and expectations. Forward-looking statements are based on a number of assumptions
and estimates that are inherently subject to significant risks and uncertainties and our results could differ materially from the results
anticipated by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors
discussed in Part I, Item 1A. Risk Factors. Also, please read the "Cautionary Statement Regarding Forward-Looking Statements"
set forth at the beginning of this Annual Report on Form 10-K.

 In addition, the following discussion should be read in conjunction with
Part I of this Annual Report on Form 10-K as well as our Consolidated Financial Statements and the related Notes to Consolidated Financial
Statements contained elsewhere in this Annual Report on Form 10-K.

 OVERVIEW

 We are a medical technology company focused on developing
and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic
wound and skincare markets. Our products, services and technologies are designed to achieve our goal of providing better clinical outcomes
at a lower overall cost for patients regardless of where they receive care. Through our two operating segments, Sanara Surgical and Tissue
Health Plus ("THP"), we strive to be one of the most innovative and comprehensive providers of effective surgical, wound
and skincare solutions and are continually seeking to expand our offerings for patients requiring treatments across the entire continuum
of care in the United States.

 Change in Reportable Segments

 Historically, we managed our business on the basis
of one operating and reportable segment. During the second quarter of 2024, we changed our reportable segments to reflect a change in
the manner in which the business is managed. Based on the growing importance of the value-based wound care program to our future outlook
and how our chief operating decision maker ("CODM"), the Chief Executive Officer, reviews operating results and makes decisions
about resource allocation, we now have two reportable segments: Sanara Surgical and THP.

 Our Sanara Surgical segment primarily markets and
sells soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Sanara Surgical's
soft tissue repair products include, among other products, our lead product, CellerateRX Surgical Activated Collagen ("CellerateRX
Surgical"), a hydrolyzed collagen that supports a local environment for surgical sites to aid in the natural wound healing process,
and BIASURGE Advanced Surgical Solution ("BIASURGE"), a sterile no-rinse, advanced surgical solution used for wound irrigation.
Sanara Surgical's bone fusion products include, among other products, BiFORM Bioactive Moldable Matrix ("BiFORM"),
an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site, and ALLOCYTE Plus Advanced Viable
Bone Matrix ("ALLOCYTE Plus"), a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable
bone fibers.

 Our Sanara Surgical segment also includes an in-house
research and development team, Rochal Technologies, with an extensive pipeline of innovative products under development.

 Tissue Health Plus

 Our value-based care segment, THP, is focused on
value-based wound care services. Through THP, we plan to offer a first of its kind value-based wound care program to payers and risk-bearing
entities such as accountable care organizations and value-based primary care companies, with Medicare Advantage payers as the initial
target market for this program.

 THP's programs are expected to enable payers
to divest wound care spend risk, reduce wound related hospitalizations and improve patient quality of life. THP plans to coordinate delivery
of community and home-based wound care for its managed patients. Community based care spans a variety of settings, including physician
offices, skilled nursing facilities, assisted living facilities and senior living facilities. THP programs are intended to integrate
science and evidence-based medicine protocols to standardize wound prevention and treatment.

 Summary of Our Product, Service and Technology
Offerings and Development Programs

 Sanara Surgical Products

 Our Sanara Surgical segment markets and distributes
surgical, wound and skincare products to physicians, hospitals, clinics, and post-acute care settings. Our products are primarily sold
in the U.S. surgical tissue repair and advanced wound care markets. We believe we have the ability to drive our product pipeline from
concept to preclinical and clinical development while meeting quality and regulatory requirements. We are constantly seeking long-term
strategic partnerships with a focus on products that improve outcomes at a lower overall cost.

 CellerateRX Surgical

 CellerateRX Surgical is a medical hydrolysate of
Type I bovine 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 powder is sterilized, packaged and designed
specifically for use in the operating room or other sterile environment. CellerateRX Surgical products are primarily purchased by hospitals
and ambulatory surgical centers for use by surgeons on surgical wounds. The majority of CellerateRX Surgical products are used for a
variety of surgical wounds, including those associated with orthopedic, spine, trauma and oncologic procedures. Additional surgical wounds
that may benefit from the use of CellerateRX Surgical include cardiovascular, gynecologic, urologic, vascular and plastic/reconstructive 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 who 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. First sales of BIASURGE occurred in November 2023.

 FORTIFY TRG

 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. First sales of this product
occurred in the fourth quarter of 2021.

 FORTIFY FLOWABLE

 FORTIFY FLOWABLE Extracellular Matrix ("FORTIFY
FLOWABLE") is an advanced wound care device that presents small intestine submucosa extracellular matrix technology in a way that
can fill irregular wound shapes and depths. FORTIFY FLOWABLE is indicated for the management of wounds, including partial and full-thickness
wounds, pressure ulcers, venous leg ulcers, diabetic foot ulcers, chronic vascular ulcers, tunneled/undermined wounds, surgical wounds
(donor sites/grafts, post-Mohs surgery, post-laser surgery, podiatric, wound dehiscence sites), traumatic wounds (abrasions, lacerations,
second-degree burns, and skin tears) and draining wounds. FORTIFY FLOWABLE is provided sterile and is intended for one-time use. It is
a 510(k) cleared product. First sales of this product occurred in the first quarter of 2022.

 Other Surgical 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 matrices containing bone-derived progenitor
cells and conformable bone fibers. These viable cellular allografts are ready to use upon thawing and have fibrous handling properties.

 Tissue Health Plus Services and Technology

 In June 2020, we formed a subsidiary, United Wound
and Skin Solutions, LLC (formerly known as "WounDerm"), to hold certain investments and operations in wound and skincare
virtual consult services. In 2024, United Wound and Skin Solutions, LLC was renamed to Tissue Health Plus, LLC. THP is continuing its
current mission to simplify skin health, starting with value-based wound care through a refined business plan. Through THP, we plan to
offer a first of its kind value-based wound care program to payers and risk-bearing entities such as accountable care organizations and
value-based primary care companies, with Medicare Advantage payers as the initial target segment for this program. THP services are
not expected to directly involve telemedicine or virtual consult services, and such services are no longer a primary focus of THP.

 We anticipate that THP's customer contracts
will have three-to-five-year terms. These contracts are expected to incorporate a mix of value-based pricing methodologies including
episodic, "per member per month," and "fee for value" pricing. We believe this approach is aligned with the financial
goals of the payers and will help deliver outstanding clinical outcomes for the patients.

 Our vision for our comprehensive approach consists
of three key sets of planned capabilities:

 (a)
 Care Hub – This virtual
 patient monitoring, care coordination and navigation center is expected to help doctors and
 nurses support their patients throughout their wound care journey, from prevention to treatment.
 We expect to have Care Hub staffed by wound care certified nurse practitioners ("NPs")
 and registered nurses ("RNs"), incorporating care delivery best practices from
 partnerships with Direct Dermatology Inc. and certain physician-led multispecialty wound
 care groups. With NPs leading Care Hub, RNs are expected to be the wound specialists, providing
 patients with expert review and support of the overarching plan of care on each patient's
 journey through the process. In addition, care navigators are expected to serve as a primary
 point of contact for patients and their providers, coordinating care, managing appointments
 and ensuring seamless communication among all team members.

 (b)
 Managed Services Organization ("MSO")
 Network – With respect to patient-side wound care, our plan is that THP's
 programs would be performed by a network of third-party providers who will be contracted
 through managed services agreements. These providers would include podiatrists, wound care
 provider groups, primary care physicians, and home health agencies. The providers in the
 THP network are expected to leverage THP's standard of care, patient education and
 tools to deliver optimal patient outcomes with high predictability and efficiency.

 (c)
 Technology Platform – THP's
 technology platform will focus on scaling workflows of THP's Care Hub and MSO Network
 through automation and integration. We expect the THP technology platform to enable enhanced
 patient empowerment and self-healthcare. We anticipate that our platform will leverage our
 technology investments and partnerships with Precision Healing Inc. ("Precision Healing"),
 Pixalere Healthcare, Inc. ("Pixalere") and others, by leveraging modern technology
 including artificial intelligence and machine learning. Our platform technology is expected
 to manage program economics, standards of care, patient monitoring, wound assessments, network
 performance monitoring, and revenue cycle management. We expect that each of these components
 will work in concert with each other, constantly improving economics and care delivery.

 We are seeking partners to facilitate commercialization
of THP and share in the cost of development of the program.

 SI Healthcare Technologies Joint Venture

 In November 2022, we established a 50/50 joint venture,
SI Healthcare Technologies, LLC ("SI Technologies") (formerly known as SI Wound Care, LLC), with InfuSystem Holdings, Inc.
("InfuSystem") focused on delivering a complete wound care solution targeted at improving patient outcomes, lowering the
cost of care, and increasing patient and provider satisfaction. The partnership is expected to enable InfuSystem to offer innovative
products, including our advanced wound care product line and Chemo Mouthpiece, a 510(k) cleared oral cryotherapy device that SI Technologies
currently has the right to distribute and sell in the United States.

 Tufts University License Agreement

 In December 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. Pursuant to 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.

 RECENT DEVELOPMENTS

 CRG Term Loan

 On April 17, 2024 (the "Closing Date"),
we, as borrower, entered into a Term Loan Agreement (the "CRG Term Loan Agreement") with the subsidiary guarantors party
thereto from time to time (collectively, the "Guarantors"), CRG Servicing LLC as administrative agent and collateral agent
(the "Agent"), and the lenders party thereto from time to time, providing for a senior secured term loan of up to $55.0 million
(the "CRG Term Loan"). In April 2024, our first borrowing (the "First Borrowing") under the CRG Term Loan of
$15.0 million was used to repay the Cadence Term Loan and to pay fees and expenses related to the CRG Term Loan Agreement. In September
2024, we borrowed an additional $15.5 million under the CRG Term Loan (the "Second Borrowing"), a portion of the proceeds
of which were used for the investment in ChemoMouthpiece, LLC ("CMp") described below. On March 19, 2025, we and the Guarantors entered into the First Amendment to the Term Loan Agreement with the Agent
and the lenders party thereto from time to time (the "CRG Amendment") to provide for up to two additional borrowings following
the Second Borrowing under the CRG Term Loan, which must occur on or prior to December 31, 2025, if at all.

 ChemoMouthpiece Investment

 On September 10, 2024, Sanara CMP LLC, a wholly owned
subsidiary of the Company ("Sanara CMP"), entered into a Unit Purchase Agreement (the "Unit Purchase Agreement")
with CMp, pursuant to which Sanara CMP purchased 100,674.72 common units in CMp for an aggregate purchase price of $5.0 million, which
represented approximately 6.64% of the issued and outstanding membership interests of CMp immediately following such purchase. Subsequent
to our initial investment in CMp, units of CMp were sold to other investors, thereby decreasing our ownership of CMp to 6.59% as of December 31,
2024. CMp is a privately held medical device company that develops and commercializes propriety oral cryotherapy products for cancer
patients, including, among other things, CMp's Chemo Mouthpiece oral cryotherapy device, which is a 510(k) cleared cryotherapy
device designed to reduce the incidence and severity of chemotherapy induced oral mucositis.

 In connection with the Unit Purchase Agreement, we,
CMp, certain subsidiaries of CMp, InfuSystem and SI Technologies, entered into an Exclusive Distribution Agreement (the "Distribution
Agreement") pursuant to which SI Technologies was appointed as the sole and exclusive U.S. distributor of CMp's Standard
Chemo Regiment Kits, each kit consisting of the Chemo Mouthpiece oral cryotherapy device and associated materials used in the treatment
of oral mucositis (the "CMp Product"), for a term of five years, subject to meeting certain minimum order requirements.

 The parties to the Distribution Agreement also entered
into an Intellectual Property Rights Agreement, pursuant to which SI Technologies was granted the exclusive right to use CMp's
intellectual property rights to permit resale and use of the CMp Product in the United States.

 BMI Investment

 On January 16, 2025 (the "Execution Date"),
we entered into a Licensing and Distribution Agreement (the "BMI License Agreement") with Biomimetic Innovation Limited,
a privately-held medical device company headquartered in Shannon, Co. Clare Ireland ("BMI"), pursuant to which we acquired
the exclusive U.S. marketing, sales and distribution rights to OsStic Synthetic Injectable Structural Bio-Adhesive Bone Void Filler ("OsStic"),
as well as an adjunctive internal fixation technology featuring novel delivery to promote targeted application of OsStic ("ARC"
and together with OsStic, the "BMI Products"), for use in the treatment of a wound or injury caused by a traumatic incident.
Pursuant to the BMI License Agreement, we were appointed by BMI as the exclusive distributor to promote, market, offer to sell, transfer,
distribute and sell the BMI Products for trauma indications inside the United States and its territories for an initial five-year term,
which term may be automatically renewed for successive two-year periods at our discretion, provided that we are in compliance with our
obligations thereunder (the "BMI Term").

 In connection with the BMI License Agreement, on
the Execution Date, we entered into a Share Subscription and Shareholders' Agreement (the "BMI Subscription Agreement")
with The Russell Revocable Living Trust, BMI and the existing shareholders of BMI, pursuant to which we agreed to contribute up to approximately
 8.0 million to BMI through a series of capital contributions in exchange for an aggregate of 16,460 ordinary shares of BMI, constituting
approximately 12.5% of the outstanding equity of BMI as of the Execution Date. We made an initial cash investment totaling approximately
 3.0 million on the Execution Date, and our previously announced convertible loan to BMI was converted into 1.0 million of
equity in BMI. Pursuant to the BMI Subscription Agreement, the remaining 4.0 million contribution is due upon the achievement of
certain development, clinical and regulatory milestones (the "Milestones"), which are expected to occur at various points during 2025. For more information regarding the BMI License
Agreement and BMI Subscription Agreement, see the "Liquidity and Capital Resources " section below.

 COMPONENTS OF RESULTS OF OPERATIONS

 Sources of Revenue

 Our revenue is derived primarily from sales of our
soft tissue repair and bone fusion products to hospitals and other acute care facilities. In particular, the substantial majority of
our product sales revenue is derived from sales of CellerateRX Surgical. Our revenue is driven by direct orders shipped by us to our
customers, and to a lesser extent, direct sales to customers through delivery at the time of procedure by one of our sales representatives.
We generally recognize revenue when a purchase order is received from the customer and our product is received by the customer. Prior
to 2024, we recognized royalty revenue from a development and licensing agreement with BioStructures, LLC. Under the terms of the development
and license agreement, royalties of 2% were recognized on sales of products containing our patented resorbable bone hemostasis. The minimum
annual royalty due to us was $201,000 per year throughout the life of the patent, which expired in 2023.

 Revenue streams from product sales and royalties
are summarized below for the years ended December 31, 2024 and 2023.

 2024

 2023

 Soft tissue repair products

 $
 76,125,012

 $
 54,836,410

 Bone fusion products

 10,547,413

 9,952,432

 Royalty revenue

 —

 201,000

 Total Net Revenue

 $

 $

 Cost of Goods Sold

 Cost of goods sold consists primarily of the acquisition
costs from the manufacturers of our licensed products, raw material costs for certain components sourced directly by us, and all related
royalties due as a result of the sale of our products. Our gross profit represents total net revenue less the cost of goods sold, and
gross margin represents gross profit expressed as a percentage of total revenue.

 Operating Expenses

 Selling, general and administrative ("SG&A")
consists primarily of salaries, sales commissions, benefits, bonuses and share-based compensation. SG&A also includes outside legal
counsel fees, audit fees, insurance premiums, rent and other corporate expenses. We expense all SG&A as incurred.

 Research and development ("R&D")
includes costs related to enhancements to our currently available products and additional investments in our product, services and technologies
development pipeline. This includes personnel-related expenses, including salaries, share-based compensation and benefits for all personnel
directly engaged in R&D activities, contracted services, materials, prototype expenses and allocated overhead, which is comprised
of compensation and benefits, lease expense and other facilities related costs. We expense R&D costs as incurred. We generally expect
that R&D will increase as we continue to support product enhancements and to bring new products to market.

 Depreciation and amortization includes depreciation
of fixed assets and amortization of intangible assets that have a finite life, such as product licenses, patents and intellectual property,
customer relationships and assembled workforces.

 Change in fair value of earnout liabilities represents
our measurement of the change in fair value at the balance sheet date of our earnout liabilities that were established at the time of
our Precision Healing merger and acquisition of Scendia Biologics, LLC ("Scendia").

 Other Income (Expense)

 Other income (expense) is primarily comprised of
interest expense and other nonoperating activities.

 RESULTS OF OPERATIONS

 The following table presents certain information
about the results and Segment Adjusted EBITDA (as described below) of our reportable business segments. See Note 14, Segment Reporting,
in Part II, Item 8 of this report for more information on our reportable business segments:

 Year
 Ended
 December
 31,

 2024

 2023

 THP

 Total

 THP

 Total

 Net revenue

 $

 $
 -

 $

 $
 64,987,112

 $
 2,730

 $

 Cost of goods sold

 8,139,901

 -

 8,139,901

 7,843,721

 8,965

 7,852,686

 Selling, general and administrative

 71,673,642

 4,886,221

 76,559,863

 54,826,852

 2,167,901

 56,994,753

 Research and development

 2,828,663

 2,874,699

 5,703,362

 902,782

 3,229,643

 4,132,425

 2,785,829

 2,137,395

 2,046,859

 1,628,167

 (14,451
)

 (1,924,000
)

 (1,938,451
)

 (1,298,336
)

 (2,151,559
)

 (3,449,895
)

 Other expense

 3,196,424

 -

 3,196,424

 224,749

 -

 224,749

 Net income (loss)

 $
 (1,937,583
)

 $
 (7,974,315
)

 $
 (9,911,898
)

 $
 440,485

 $
 (4,880,387
)

 $
 (4,439,902
)

 Segment Adjusted EBITDA

 $
 9,148,722

 $
 (6,457,415
)

 $
 2,691,307

 $
 5,289,634

 $
 (5,162,387
)

 $
 127,247

 Net Revenue. For the year ended
December 31, 2024, we generated net revenue of $86.7 million compared to net revenue of $65.0 million for the year ended
December 31, 2023, a 33% increase over the prior year. The higher net revenue in 2024 was primarily due to increased sales of
soft tissue repair products, including CellerateRX Surgical and BIASURGE, and certain bone fusion products as a result of our
increased market penetration, geographic expansion and our continuing strategy to expand our independent distribution network in
both new and existing U.S. markets. In addition, during the fourth quarter of 2024, we experienced a growth in sales of BIASURGE as
a result of supply chain issues and shortages of intravenous ("IV") fluids and saline solutions due to Hurricane Helene.
BIASURGE revenues returned to normal levels in the first quarter of 2025 as access to IV fluids and saline solutions used for the
treatment of wound irrigation was restored.

 Cost of Goods Sold. Cost of goods sold
for the year ended December 31, 2024 was $8.1 million compared to cost of goods sold of $7.9 million for the year ended December 31,
2023. The higher gross margins realized in 2024 were due to increased sales of soft tissue repair products, particularly CellerateRX
Surgical, and the elimination of royalties paid on the sales of CellerateRX Surgical as a result of the Applied Asset Purchase (as described
in further detail in the "Liquidity and Capital Resources" section below.

 Gross Profit. On a consolidated
basis, we generated gross profit of $78.5 million for the
year ended December 31, 2024 compared to gross profit of $57.1 million for the year ended December 31, 2023, a 37.4%
increase over the prior year period. The higher gross profit in 2024 was primarily due to increased sales of soft tissue repair
products, particularly CellerateRX Surgical and BIASURGE, as a result of our increased market penetration and geographic expansion,
and our continuing strategy to expand our independent distribution network in both new and existing U.S. markets.

 Selling, general and administrative.
SG&A for the year ended December 31, 2024 was $76.6 million compared to SG&A of $57.0 million for the year ended December 31,
2023. The higher SG&A expenses in 2024 were primarily due to increased direct sales and marketing expenses, which accounted for approximately
$13.0 million of the increase compared to the prior year period. Our 2024 SG&A also included $4.9 million of costs related to the
buildout of our THP platform and infrastructure, $1.0 million of executive separation costs and $1.4 million of acquisition costs related
to prospective investments.

 Research and development. R&D for
the year ended December 31, 2024 was $5.7 million compared to R&D of $4.1 million for the year ended December 31, 2023.
The higher R&D in 2024 was primarily due to development projects associated with surgical product candidates.

 Depreciation and amortization. Depreciation
and amortization for the year ended December 31, 2024 was $4.9 million compared to depreciation and amortization of $3.7 million
for the year ended December 31, 2023. The increase in depreciation and amortization in 2024 was primarily due to amortization of
intangible assets acquired as part of the Applied Asset Purchase, which closed in August 2023, and a $0.5 million non-cash charge during
the fourth quarter of 2024 to write-off the remaining net book value of certain THP internal use software assets.

 Change in fair value of earnout liabilities.
 Change in fair value of earnout liabilities was a benefit of $1.9 million for the year ended December 31, 2024 compared
to a benefit of $3.4 million for the year ended December 31, 2023. The benefit recognized in 2024 was due to a decrease in the estimated
fair value of earnout liabilities associated with the Precision Healing merger, as well as adjustments to the projected timing of payments
related to the Applied Asset Purchase earnout.

 Other expense. Other expense for the
year ended December 31, 2024 was $3.2 million compared to $0.2 million for the year ended December 31, 2023. Other expense
for the year ended December 31, 2024 primarily included higher interest expense and fees related to the CRG Term Loan.

 Net loss. For the year ended December 31,
2024, we had a net loss of $9.9 million, compared to a net loss of $4.4 million for the year ended December 31, 2023. Our net loss
included $8.0 million and $4.9 million related to our THP segment for the year ended December 31, 2024 and 2023, respectively. The
higher net loss in 2024 was primarily due to higher costs related to the buildout of our THP platform and infrastructure, increased interest
expense related to the CRG Term Loan, lower benefits realized in connection with changes in fair value of earnout liabilities, and higher
amortization of our acquired intangible assets, partially offset by higher gross profit.

 Segment Adjusted EBITDA. Segment Adjusted
EBITDA is the primary profitability measure used by the CODM for purposes of assessing financial performance and resource allocation.
We define Segment Adjusted EBITDA for the reportable segments as net income (loss) excluding interest expense/income, provision/benefit
for income taxes, depreciation and amortization, non-cash share-based compensation expense, change in fair value of earnout liabilities,
share of losses from equity method investments, executive separation costs, legal and diligence expenses related to acquisitions, and
gains/losses on the disposal of property and equipment, as each are applicable to the periods presented. We have historically presented this profitability measure as Segment EBITDA and, starting with the fourth quarter
ended December 31, 2024, are presenting it as Segment Adjusted EBITDA. The definition and methodology for calculating this measure has
remained unchanged. Segment Adjusted EBITDA is a
non-GAAP measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of
financial performance reported in accordance with GAAP.

 We believe Segment Adjusted EBITDA is useful to investors
because it facilitates comparisons of our core business operations across periods on a consistent basis. Accordingly, we adjust for certain
items, such as change in fair value of earnout liabilities, when calculating Segment Adjusted EBITDA because we believe that such items
are not related to our core business operations. We do not, nor do we suggest that investors should, consider these non-GAAP financial
measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Material limitations associated
with the use of such measures include that they do not reflect all costs included in operating expenses and may not be comparable with
similarly named financial measures of other companies. Furthermore, these non-GAAP financial measures are based on subjective determinations
of management regarding the nature and classification of events and circumstances. We present these non-GAAP financial measures to provide
investors with information to evaluate our operating results in a manner similar to how management evaluates business performance. To
compensate for any limitations in such non-GAAP financial measures, management believes that it is useful in understanding and analyzing
the results of the business to review both GAAP information and the related non-GAAP financial measures.

 The following table provides a reconciliation of
net income (loss) to Segment Adjusted EBITDA for our business segments for the periods indicated below:

 Year
 Ended
 December
 31,

 2024

 2023

 THP

 Total

 THP

 Total

 Net Income (Loss)

 $
 (1,937,583
)

 $
 (7,974,315
)

 $
 (9,911,898
)

 $
 440,485

 $
 (4,880,387
)

 $
 (4,439,902
)

 Adjustments:

 Interest expense

 3,128,395

 -

 3,128,395

 475,783

 -

 475,783

 Interest income

 (21,978
)

 -

 (21,978
)

 -

 -

 -

 Depreciation and amortization (1)

 2,785,829

 2,137,395

 2,046,859

 1,628,167

 Noncash share-based compensation

 3,969,008

 138,245

 4,107,253

 3,201,330

 241,392

 3,442,722

 (14,451
)

 (1,924,000
)

 (1,938,451
)

 (1,298,336
)

 (2,151,559
)

 (3,449,895
)

 Share of losses from equity method investments

 -

 -

 -

 -

 Executive separation costs (2)

 964,466

 -

 964,466

 -

 -

 -

 Acquisition costs (3)

 185,029

 1,165,260

 1,350,289

 423,513

 -

 423,513

 Segment Adjusted EBITDA

 $
 9,148,722

 $
 (6,457,415
)

 $
 2,691,307

 $
 5,289,634

 $
 (5,162,387
)

 $
 127,247

 (1) Includes a $506,836 non-cash charge during the fourth quarter
of 2024 to write-off the remaining net book value of certain THP internal use software assets.

 (2) Includes $328,795 of share-based compensation related to
executive separation costs for the year ended December 31, 2024.

 (3) Acquisition costs include legal, tax and accounting services
related to prospective acquisitions.

 For the year ended December 31, 2024, our Segment
Adjusted EBITDA was $2.7 million compared to $0.1 million for the year ended December 31, 2023. Our Segment Adjusted EBITDA included
$(6.5) million and $(5.2) million related to our THP segment for the year ended December 31, 2024 and 2023, respectively. The higher
Segment Adjusted EBITDA in 2024 was primarily due to higher net revenue and gross profit as discussed above.

 LIQUIDITY AND CAPITAL RESOURCES

 Cash on hand at December 31, 2024 was $15.9
million, compared to $5.1 million at December 31, 2023. Historically, we have financed our operations primarily from borrowings
under our credit facilities and the sale of equity securities. We expect to continue to investment in the THP strategy in
preparation for launch of our first pilot program with a wound care provider group during the second quarter of 2025. We expect our continued investment over the first half of 2025 is currently estimated at $7.5
million to $10.0 million. We are pursuing financial partners to invest in the execution of this strategy.

 We expect our future needs for cash to include the
funding of our additional investment in THP, potential acquisitions, further development of our products, services and technologies pipeline,
clinical studies, repayment of debt as it becomes due and for general corporate purposes. If we seek to consummate acquisitions in the
future, we expect to finance such acquisitions with the proceeds from equity or debt issuances. Based on our current plan of operations,
we believe our cash on hand, when combined with expected cash flows from operations and available proceeds from the CRG Term Loan discussed
herein, will be sufficient to fund our growth strategy and to meet our anticipated operating expenses and capital expenditures for at
least the next 12 months. As of December 31, 2024, there was $24.5 million available for future borrowing under the CRG Term Loan.

 At-the-Market Offering

 In February 2023, we entered into a Controlled Equity
Offering SM Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co., as sales agent ("Cantor"),
pursuant to which we could offer and sell from time to time, to or through Cantor, shares of our common stock having an aggregate offering
price of up to $75.0 million.

 Sales of the shares, pursuant to the Sales Agreement,
were made in sales deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under the Securities
Act of 1933, as amended. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Cantor agreed
to use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules
and regulations and the rules of The Nasdaq Capital Market to sell the shares from time to time based upon our instructions, including
any price, time period or size limits specified by us. We had no obligation to sell any of the shares under the Sales Agreement and could
suspend or terminate the offering of our common stock pursuant to the Sales Agreement upon notice to Cantor and subject to other conditions.
Pursuant to the Sales Agreement, we paid Cantor a commission of 3.0% of the aggregate gross proceeds from each sale of the shares.

 In 2023, we sold an aggregate of 26,143 shares of
common stock for gross proceeds of approximately $1.1 million and net proceeds of approximately $0.9 million pursuant to the Sales Agreement.
We paused the offering at the end of the first quarter of 2023 and did not reactivate it during the remainder of 2023. The Registration
Statement on Form S-3 relating to this offering expired in January 2024.

 Applied Asset Purchase

 On August 1, 2023, we entered into an asset purchase
agreement (the "Applied Purchase Agreement") by and among the Company, Sanara MedTech Applied Technologies, LLC ("SMAT"),
The Hymed Group Corporation, Applied and Dr. George D. Petito (the "Owner"), pursuant to which SMAT acquired certain assets
of the Sellers and the Owner, including, among others, the Sellers' and Owner's inventory, intellectual property, manufacturing
and related equipment, goodwill, rights and claims, other than certain excluded assets (the "Applied Purchased Assets") and
assumed certain Assumed Liabilities (as defined in the Applied Purchase Agreement) upon the terms and subject to the conditions set forth
in the Applied Purchase Agreement. The transaction closed on August 1, 2023. The Applied Purchased Assets were purchased for an initial
aggregate purchase price of $15.25 million, consisting of (i) $9.75 million in cash (the "Cash Closing Consideration"), (ii)
73,809 shares of our common stock, with an agreed upon value of $3.0 million (the "Stock Closing Consideration") and (iii)
$2.5 million in cash, to be paid in four equal installments on each of the next four anniversaries of the Closing (the "Installment
Payments"). The first Installment Payment of $625,000 was made in August 2024.

 In addition to the Cash Closing Consideration, Stock
Closing Consideration and Installment Payments, the Applied Purchase Agreement provides that the Sellers are entitled to receive up to
an additional $10.0 million (the "Applied Earnout"), which is payable to the Sellers in cash, upon the achievement of certain
performance thresholds relating to SMAT's collections from net sales of a collagen-based product currently under development. Upon
expiration of the seventh anniversary of the Closing, to the extent the Sellers have not earned the entirety of the Applied Earnout,
SMAT shall pay the Sellers a pro-rata amount of the Applied Earnout based on collections from net sales of the product, with such amount
to be due credited against any Applied Earnout payments already made by SMAT (the "True-Up Payment"). The Applied Earnout,
minus the True-Up Payment and any Applied Earnout payments already made by SMAT, may be earned at any point in the future, including
after the True-Up Payment is made.

 Cadence Loan Agreement

 On August 1, 2023, we, as guarantor, and our wholly
owned subsidiary SMAT, as borrower, entered into a loan agreement (the "Cadence Loan Agreement") with Cadence Bank ("Cadence")
that provided for, among other things, a term loan in the aggregate principal amount of up to $12.0 million, which was evidenced by an
advancing promissory note. Pursuant to the Cadence Loan Agreement, Cadence agreed to make, at any time and from time to time prior to
February 1, 2024, one or more advances to SMAT. On August 1, 2023, Cadence made an advance under the Cadence Term Loan for $9.75 million,
the proceeds of which were used to fund the Cash Closing Consideration for the Applied Asset Purchase. The Cadence Term Loan Agreement was terminated and all outstanding amounts under the Cadence Term Loan were repaid
in full and all security interest and other liens granted to or held by Cadence were terminated and released in April 2024.

 CRG Term Loan Agreement

 On April 17, 2024, we entered into the CRG Term Loan
Agreement by and among us, as borrower, the Guarantors, the Agent and the lenders party thereto from time to time, providing for a senior
secured term loan of up to $55.0 million. On the Closing Date, the First Borrowing of $15.0 million was made to repay the Cadence Term
Loan and to pay certain fees and expenses related to the CRG Loan Agreement. The remaining proceeds of $4.5 million were distributed
to us. As a result, the Cadence Term Loan Agreement was terminated and all outstanding amounts under the Cadence Term Loan were repaid
in full and all security interest and other liens granted to or held by Cadence were terminated and released.

 On September 4, 2024, pursuant to our option
under the CRG Term Loan Agreement, we borrowed an additional $15.5 million under the CRG Term Loan Agreement (the "Second
Borrowing"). We used $5.0 million of the proceeds of the Second Borrowing for the investment in CMp (discussed in more detail
below). Prior to the CRG Amendment, pursuant to the CRG Term Loan Agreement, we were entitled to one additional borrowing, which was
required to occur on or prior to June 30, 2025 and be at least $5.0 million or a multiple of $5.0 million. On March 19, 2025, we entered into the CRG Amendment, which amended the CRG Term Loan Agreement to, among other
things, (i) entitle us to two additional borrowings following the Second Borrowing, which borrowings must occur on or prior to December
31, 2025, if at all, and (ii) remove the requirement that any borrowing be in whole multiples of $5.0 million. Any additional borrowings
under the CRG Term Loan will be subject to the satisfaction of certain conditions, including the Agent having received certain fees.

 The First Borrowing, Second Borrowing and any additional
borrowings under the CRG Term Loan are due and payable on March 30, 2029 (the "Maturity Date"), absent any acceleration.

 The CRG Term Loan bears interest at a per annum rate
equal to 13.25% (subject to a 4.0% increase during an event of default), of which 8.00% must be paid in cash and 5.25% may, at our election,
be deferred through the 19 th quarterly Payment Date (defined below) by adding such amount to the aggregate principal loan
amount, so long as no default or event of default under the CRG Term Loan Agreement has occurred and is continuing. We are required to
make quarterly interest payments on the final business day of each calendar quarter following the Closing Date, commencing on the first
such date to occur at least 30 days after the Closing Date (each, a "Payment Date"). Interest is payable on each Payment
Date in arrears with respect to the time between each Payment Date and upon the payment or prepayment of the CRG Term Loan, ending on
the Maturity Date. In addition, we are required to pay an upfront fee of 1.50% of the principal amount of the CRG Term Loan, which is
payable as amounts are advanced under the CRG Term Loan on a pro rata basis. We are also required to pay a back-end fee equal to 7.00%
of the aggregate principal amount advanced under the CRG Term Loan Agreement. We paid upfront fees of $225,000 on the Closing Date related
to the First Borrowing and $232,500 of upfront fees on September 4, 2024 related to the Second Borrowing. As of December 31, 2024, there
was $30.5 million of principal outstanding and $24.5 million available for future borrowing under the CRG Term Loan.

 Subject to certain exceptions, we are required to
make mandatory prepayments of the CRG Term Loan with the proceeds of certain assets sales and in the event of a change of control of
the Company. In addition, we may make a voluntary prepayment of the CRG Term Loan, in whole or in part, at any time. All mandatory and
voluntary prepayments of the CRG Term Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs on
or prior to the date that is one year following the applicable borrowing (the "Borrowing Date"), an amount equal to 10.0%
of the aggregate outstanding principal amount of the Loan being prepaid and (ii) if prepayment occurs one year after the applicable Borrowing
Date and on or prior to two years following the applicable Borrowing Date, an amount equal to 5.0% of the aggregate outstanding principal
amount of the CRG Term Loan being prepaid. No prepayment premium is due on any principal prepaid if prepayment occurs two years or more
after the applicable Borrowing Date.

 Certain of our current and future subsidiaries, including
the Guarantors, are guaranteeing our obligations under the CRG Term Loan Agreement. As security for our obligations under the CRG Term
Loan Agreement, on the Closing Date, we and the Guarantors entered into a security agreement with the Agent pursuant to which we and
the Guarantors granted to the Agent, as collateral agent for the lenders, a lien on substantially all of our and the Guarantors'
assets, including intellectual property (subject to certain exceptions).

 The CRG Term Loan Agreement contains affirmative
and negative covenants customary for financings of this type, including limitations on our and the Guarantors' abilities, among
other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions above certain thresholds,
merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case,
subject to certain exceptions. In addition, the CRG Term Loan Agreement contains the following financial covenants requiring us and the
Guarantors in the aggregate to maintain:

 liquidity in an amount which shall
 exceed the greater of (i) $3.0 million and (ii) to the extent we have incurred certain permitted
 debt, the minimum cash balance, if any, required of us by the creditors of such permitted
 debt; and

 annual minimum revenue of at least
 (i) $60.0 million for the twelve-month period beginning on January 1, 2024 and ending on
 December 31, 2024, (ii) $75.0 million for the twelve-month period beginning on January 1,
 2025 and ending on December 31, 2025, (iii) $85.0 million for the twelve-month period beginning
 on January 1, 2026 and ending on December 31, 2026, (iv) $95.0 million for the twelve-month
 period beginning on January 1, 2027 and ending on December 31, 2027 and (v) $105.0 million
 during each twelve-month period beginning on January 1 of a given year thereafter.

 As of December 31, 2024, we were in compliance
with all debt covenants.

 ChemoMouthpiece Investment

 On September 10, 2024, Sanara CMP entered into the
Unit Purchase Agreement with CMp, pursuant to which Sanara CMP purchased 100,674.72 common units in CMp for an aggregate purchase price
of $5.0 million, or $49.6649 per unit, which represented approximately 6.64% of the issued and outstanding membership interests of CMp
immediately following such purchase. Subsequent to our initial investment in CMp, additional units of CMp were sold to other investors,
thereby decreasing our ownership of CMp to 6.59% as of December 31, 2024.

 In connection with the Unit Purchase Agreement, we,
CMp, certain subsidiaries of CMp, InfuSystem and SI Technologies, entered into the Distribution Agreement pursuant to which SI Technologies
was appointed as the sole and exclusive U.S. distributor of the CMp Product for a term of five years, subject to meeting certain minimum
order requirements.

 The parties to the Distribution Agreement also entered
into an Intellectual Property Rights Agreement, pursuant to which SI Technologies was granted the exclusive right to use CMp's
intellectual property rights to permit resale and use of the CMp Product in the United States.

 BMI Investment

 On January 16, 2025, we entered into the BMI License
Agreement with BMI, pursuant to which we acquired the exclusive U.S. marketing, sales and distribution rights to OsStic, as well as ARC,
for use in the treatment of a wound or injury caused by a traumatic incident.

 Pursuant to the License Agreement, we were appointed
by BMI as the exclusive distributor to promote, market, offer to sell, transfer, distribute and sell the BMI Products for trauma indications
inside the United States and its territories for the BMI Term, provided that we are in compliance with its obligations thereunder. From
the Execution Date until October 13, 2025, we have an exclusive option to negotiate exclusive distribution rights for the BMI Products
in additional fields and/or additional territories on substantially the same terms as those set forth in the BMI License Agreement.

 The BMI License Agreement requires that we pay BMI
Quarterly Royalties based on a percentage of the Net Sales Value (as defined in the License Agreement) of the Products during the BMI
Term, with the applicable percentage of the Net Sales Value for OsStic being in the mid-single digit range. Pursuant to the BMI License
Agreement, we and BMI agreed to negotiate the applicable percentage of the Net Sales Value for ARC at a future date. The BMI License
Agreement also requires that we pay BMI minimum royalty payments being in the low to mid six figure range for the first, second and third
years, respectively, following the receipt of first regulatory approval for the marketing and sale of a Product.

 In connection with the BMI License Agreement, on
the Execution Date, we entered into the Subscription Agreement, pursuant to which we agreed to contribute up to approximately 8.0
million to BMI through a series of capital contributions in exchange for an aggregate of 16,460 ordinary shares of BMI, constituting
approximately 12.5% of the outstanding equity of BMI as of the Execution Date. We made an initial cash investment totaling approximately
 3.0 million on the Execution Date, and the Company's previously announced convertible loan to BMI was converted into 1.0
million of equity in BMI. Pursuant to the Subscription Agreement, the remaining 4.0 million contribution is due upon the achievement
of the Milestones, which are expected to occur at various points during 2025.

 Cash Flow Analysis

 For the year ended December 31, 2024, net cash
used in operating activities was $23,784 compared to $3.2 million used in operating activities for the year ended December 31, 2023.
The lower use of cash in operating activities in 2024 was largely due to our net revenue growth outpacing the growth of our cash operating
expenses and partly due to the timing of cash expenditures for certain accrued payables.

 For the year ended December 31, 2024, net cash
used in investing activities was $6.6 million compared to $10.2 million used in investing activities during the year ended December 31,
2023. Cash used in investing activities during 2024 primarily included $5.3 million for our investment in CMp and $1.1 million for the
funding of a convertible loan related to our minority investment in BMI. Cash used in investing activities during 2023 primarily included
$9.9 million used for the Applied Asset Purchase.

 For the year ended December 31, 2024, net cash
provided by financing activities was $17.4 million compared to $9.6 million provided by financing activities for the year ended December 31,
2023. The increase in cash provided by financing activities during the year ended December 31, 2024 was due to the receipt of proceeds
from the CRG Term Loan, which were partially offset by the payoff of the Cadence Term Loan and the final earnout payment of approximately
$1.1 million related to the Scendia earnout.

 MATERIAL TRANSACTIONS WITH RELATED PARTIES

 CellerateRX Surgical Sublicense Agreement

 On August 1, 2023, we acquired, among other things,
the underlying intellectual property of, as well as the rights to manufacture and sell, CellerateRX Surgical from Applied for human wound
care use. Prior to such time, we had licensed the rights to these products through a sublicense agreement (the "Sublicense Agreement")
with CGI Cellerate RX, LLC ("CGI Cellerate RX"), an affiliate of The Catalyst Group, Inc. ("Catalyst"), both
of which are related parties. Prior to the Applied Asset Purchase, we paid royalties based on the annual Net Sales of licensed products
(as defined in the Sublicense Agreement) consisting of 3% of all collected Net Sales each year up to $12.0 million, 4% of all collected
Net Sales each year that exceed $12.0 million up to $20.0 million, and 5% of all collected Net Sales each year that exceed $20.0 million.
Ronald T. Nixon, our Chief Executive Officer and Executive Chairman, is the founder and managing partner of Catalyst.

 In connection with the Applied Asset Purchase, Applied
assigned its license agreement with CGI Cellerate RX to SMAT (the "License Agreement"), and on October 10, 2024, the License
Agreement and the Sublicense Agreement were terminated for no additional consideration.

 Consulting Agreement

 In July 2021, we entered into an asset purchase agreement
with Rochal, a related party. Concurrent with the Rochal asset purchase, we entered into a consulting agreement with Ann Beal Salamone
pursuant to which Ms. Salamone agreed to provide us with consulting services with respect to, among other things, writing new patents,
conducting patent intelligence and participating in certain grant and contract reporting. In consideration for the consulting services
to be provided to us, Ms. Salamone is entitled to receive an annual consulting fee of $177,697, with payments to be paid once per month.
The consulting agreement had an initial term of three years, unless earlier terminated by us, and is subject to renewal. Effective July
13, 2024, the consulting agreement with Ms. Salamone was amended to provide that the initial term shall be automatically renewed for
successive one-year terms for up to three successive years unless earlier terminated by either party without cause at any time, provided
that the terminating party provides 90 days advance written notice of termination. Ms. Salamone is a director of the Company, is a significant
shareholder and the current chair of the board of directors of Rochal.

 Catalyst Transaction Advisory Services Agreement

 In March 2023, we entered into a Transaction Advisory
Services Agreement (the "Catalyst Services Agreement") effective March 1, 2023 with Catalyst, a related party. Pursuant to
the Catalyst Services Agreement, Catalyst, by and through its directors, officers, employees and affiliates that are not simultaneously
serving as directors, officers or employees of the Company (collectively, the "Covered Persons"), agreed to perform certain
transaction advisory, business and organizational strategy, finance, marketing, operational and strategic planning, relationship access
and corporate development services for us in connection with any merger, acquisition, recapitalization, divestiture, financing, refinancing,
or other similar transaction in which we may be, or may consider becoming, involved, and any such additional services as mutually agreed
upon in writing by and between Catalyst and us (the "Catalyst Services").

 Pursuant to the Catalyst Services Agreement, we agreed
to reimburse Catalyst for (i) compensation actually paid by Catalyst to any of the Covered Persons at a rate no more than a rate consistent
with industry practice for the performance of services similar to the Catalyst Services, as documented in reasonably sufficient detail,
and (ii) all reasonable out-of-pocket costs and expenses payable to unaffiliated third parties, as documented in customary expense reports,
as each of (i) and (ii) is incurred in connection with the Catalyst Services rendered under the Catalyst Services Agreement, with all
reimbursements being contingent upon the prior approval of the Audit Committee of our Board of Directors. We incurred costs relating
to the Catalyst Services Agreement of $288,594 and $174,486 during year ended December 31, 2024 and 2023, respectively.

 Receivables and Payables

 We had outstanding related party receivables totaling
$40,566 at December 31, 2024 and $8,400 at December 31, 2023. We had outstanding related party payables totaling $30,913 at
December 31, 2024 and $77,805 at December 31, 2023.

 IMPACT OF INFLATION AND CHANGING PRICES

 Inflation and changing prices have not had a material
impact on our historical results of operations. We do not currently anticipate that inflation and changing prices will have a material
impact on our future results of operations.

 CRITICAL ACCOUNTING ESTIMATES

 Our discussion and analysis of our financial condition
and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the consolidated financial statements, and the reported revenue and expenses during the reporting period. We base our estimates on
historical experience and on various other assumptions that we believe to be reasonable under the circumstances. The results of these
assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources. Under different assumptions or conditions, actual results may differ from these estimates.

 We have identified certain significant accounting
estimates which involve a higher degree of judgment and complexity in making certain estimates and assumptions that affect amounts reported
in our consolidated financial statements, as summarized below.

 Inventories

 Inventories are stated at the lower of cost or net
realizable value, with cost computed on a first-in, first-out basis. Inventories consist primarily of finished goods, and also include
an immaterial amount of raw materials and related packaging components. We recorded inventory obsolescence expense of $521,757 for the
year ended December 31, 2024 and $406,812 for the year ended December 31, 2023. The allowance for obsolete and slow-moving inventory
had a balance of $534,549 at December 31, 2024 and $446,917 at December 31, 2023.

 Goodwill

 The excess of purchase price over the fair value
of identifiable net assets acquired in business combinations is recorded as goodwill. As of December 31, 2024 and 2023, all of our
goodwill relates to the acquisition of Scendia. Goodwill has an indefinite useful life and is not amortized. Goodwill is tested annually
as of December 31 for impairment, or more frequently if circumstances indicate impairment may have occurred. We may first perform a qualitative
assessment to determine if it is more likely than not that the fair value of the reporting unit is less than the respective carrying
value. If it is determined that it is more likely than not that a reporting unit's fair value is less than its carrying value,
then we will determine the fair value of the reporting unit and record an impairment charge for the difference between fair value and
carrying value (not to exceed the carrying amount of goodwill). No impairment was recorded during the years ended December 31, 2024
or 2023.

 Impairment of Long-Lived Assets

 Long-lived assets, including certain identifiable
intangibles held and to be used by us, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. We continuously evaluate the recoverability of our long-lived assets based on estimated
future cash flows and the estimated liquidation value of such long-lived assets and provide for impairment if such undiscounted cash
flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write
the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are
determined based on quoted market values, undiscounted cash flows or internal and external appraisals, as applicable. Assets to be disposed
of are carried at the lower of carrying value or estimated fair value less cost to sell. A $0.5 million non-cash charge to write-off
the remaining net book value of certain THP internal use software assets was recorded during the year ended December 31, 2024. No
impairment was recorded during the year ended December 31, 2023.

 Investments in Equity Securities

 Our equity investments consist of nonmarketable equity
securities in privately held companies without readily determinable fair values. Unless accounted for under the equity method of accounting,
the investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly
transactions for the identical or similar investment of the same issuer.

 We apply the equity method of accounting for investments
when we have significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each
equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation
in policy-making decisions and material intercompany transactions. As discussed further in Note 6, as of December 31, 2024, we
had two investments that are recorded applying the equity method of accounting. Our proportionate share of the net income (loss) resulting
from these investments is reported under the line item captioned "Share of losses from equity method investments" in our
Consolidated Statements of Operations. Our equity method investments are adjusted each period for our share of the investee's income
or loss and dividend paid, if any. We classify distributions received from our equity method investments using the cumulative earnings
approach in our Consolidated Statements of Cash Flows.

 We reviewed the carrying value of our investments
and determined there was no impairment or observable price changes as of and for the years ended December 31, 2024 and 2023.

 Income Taxes

 We account for income taxes in accordance with ASC
Topic No. 740, Income Taxes. This standard requires us to provide a net deferred tax asset or liability equal to the expected future
tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit
carry forwards. A valuation allowance is provided if it is more likely than not that some or all of a net deferred tax asset will not
be realized.

 Off-Balance Sheet Arrangements

 None.

 ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 As a smaller reporting company, we are not required
to provide this information.

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

 SANARA MEDTECH INC. AND SUBSIDIARIES

 Index to Consolidated Financial Statements

 Report of Independent
 Registered Public Accounting Firm (Weaver and Tidwell, L.L.P. PCAOB
 No. 410)

 Consolidated Balance Sheets

 Consolidated Statements of
 Operations

 Consolidated Statements of
 Changes in Shareholders' Equity

 Consolidated Statements of
 Cash Flows

 Notes to Consolidated Financial
 Statements

 F- 1

 Report of Independent
Registered Public Accounting Firm

 Board of Directors and Shareholders

 Sanara MedTech Inc.

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated
balance sheets of Sanara MedTech Inc. and subsidiaries (collectively, the Company) as of December 31, 2024 and 2023, and the related
consolidated statements of operations, changes in shareholders' equity and cash flows for each of the two years in the period
ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the financial position of Company as of
December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended
December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion

 These financial statements are the responsibility
of the entity's management. Our responsibility is to express an opinion on these financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matter communicated below
is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to
the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Evaluation of Impairment Triggering Events for
Tissue Health Plus Segment Intangible Assets (Note 5 and Note 14)

 Critical Audit Matter Description

 As discussed in Note 14, as of December 31, 2024,
the Company determined that it has two reportable segments. As of December 31, 2024, the Tissue Health Plus segment was primarily comprised
of research and development activities related to the intangible assets acquired in the 2022 acquisition of Precision Healing, Inc. as
the Company pursues its value-based wound care strategy.

 The Company performs an evaluation of whether
triggering events have occurred which may indicate that the carrying amount of an asset may not be recoverable. During the year-ended
December 31, 2024, management concluded that there were no triggering events which indicated that the carrying amount of the intellectual
property intangible assets acquired from Precision Healing, Inc. is not recoverable. Management did, however, determine that the historic
WounDerm software assets were no longer expected to be used in the Company's strategic plans and, accordingly, concluded that the
carrying amount was not recoverable and recorded an impairment charge to reduce the carrying amount of those assets to $0.

 F- 2

 We identified the evaluation of triggering events
as a critical audit matter because such analysis required the application of greater auditor judgment. Potential triggering events, such
as the changes to the Company's segments, required a higher degree of auditor judgment to evaluate. These possible triggering events
could have a significant effect on the Company's assessment to determine whether further quantitative analysis of recoverability
was required.

 How the Critical Audit Matter
Was Addressed in the Audit

 Our primary audit procedures
related to the Company's analysis included the following, among others:

 We obtained an understanding of the design and implementation
of management's controls over the triggering event analysis.

 We obtained and evaluated the related
triggering event analysis prepared by management, evaluated responses as to factors considered, and evaluated whether the Company omitted
any significant internal or external factors in their evaluation.

 Inquired of management and the
board of directors to gain an understating of the Company's strategic plans and considered such responses in relation to the matters
evaluated and management's assessment contained in the triggering event analysis.

 Evaluated the appropriateness of the evaluation framework
utilized by management and the matters considered. This testing included inquiries with management as well as consideration of positive
and negative evidence impacting management's considerations.

 We have served as the Company's auditor since
2021.

 /s/ Weaver and Tidwell, L.L.P.

 Austin, Texas

 March 25, 2025

 F- 3

 CONSOLIDATED BALANCE SHEETS

 2024

 2023

 Assets

 Current assets

 Cash

 $
 15,878,295

 $
 5,147,216

 Accounts receivable, net

 12,408,819

 8,474,965

 Accounts receivable – related parties

 40,566

 8,400

 Accounts
 receivable

 40,566

 8,400

 Royalty receivable

 -

 49,344

 Inventory, net

 2,753,032

 4,717,533

 Convertible loan receivable

 1,101,478

 -

 Prepaid and other assets

 1,123,798

 608,411

 Total current assets

 33,305,988

 19,005,869

 Long-term assets

 Intangible assets, net

 41,006,776

 44,926,061

 Goodwill

 Investment in equity securities

 8,297,223

 3,084,278

 Right of use assets – operating leases

 1,447,907

 1,995,204

 Property and equipment, net

 432,317

 1,257,956

 Total long-term assets

 54,786,004

 54,865,280

 Total assets

 $
 88,091,992

 $
 73,871,149

 Liabilities and shareholders' equity

 Current liabilities

 Accounts payable

 $
 1,499,764

 $
 1,924,082

 Accounts payable – related parties

 30,913

 77,805

 Accounts
 payable

 30,913

 77,805

 Accrued bonuses and commissions

 10,778,840

 7,676,770

 Accrued royalties and expenses

 2,621,867

 2,047,678

 Earnout liabilities – current

 -

 1,100,000

 Current portion of debt

 -

 580,357

 Operating lease liabilities – current

 358,687

 361,185

 Total current liabilities

 15,290,071

 13,767,877

 Long-term liabilities

 Long-term debt, net of current portion

 30,689,290

 9,113,123

 Earnout liabilities – long-term

 748,001

 2,723,001

 Operating lease liabilities – long-term

 1,237,051

 1,737,445

 Other long-term liabilities

 1,215,617

 1,941,686

 Total long-term liabilities

 33,889,959

 15,515,255

 Total liabilities

 49,180,030

 29,283,132

 Commitments and contingencies (Note 9)

 -

 -

 Shareholders' equity

 Common Stock: $ 0.001 par value, 20,000,000 shares authorized; 8,753,773 issued and outstanding as
 of December 31, 2024 and 8,535,239 issued and outstanding as of December 31, 2023

 8,754

 8,535

 Additional paid-in capital

 77,179,211

 72,860,556

 Accumulated deficit

 ( 37,784,392
)

 ( 28,036,814
)

 Total Sanara MedTech shareholders' equity

 39,403,573

 44,832,277

 Equity attributable to noncontrolling interest

 ( 491,611
)

 ( 244,260
)

 Total shareholders' equity

 38,911,962

 44,588,017

 Total liabilities and shareholders'
 equity

 $
 88,091,992

 $
 73,871,149

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

 F- 4

 CONSOLIDATED STATEMENTS OF OPERATIONS

 2024

 2023

 Year Ended December 31,

 2024

 2023

 Net Revenue

 $

 $

 Cost of goods sold

 8,139,901

 7,852,686

 Gross profit

 78,532,524

 57,137,156

 Operating expenses

 Selling, general and administrative

 76,559,863

 56,994,753

 Research and development

 5,703,362

 4,132,425

)

 ( 3,449,895
)

 Total operating expenses

 85,247,998

 61,352,309

 Operating loss

 ( 6,715,474
)

 ( 4,215,153
)

 Other income (expense)

 Interest expense

 ( 3,128,395
)

 ( 475,783
)

 Share of losses from equity method investments

 ( 90,007
)

 -

 Interest income

 21,978

 -

 Gain on disposal of investment

 -

 251,034

 Total other income (expense)

 ( 3,196,424
)

 ( 224,749
)

 Net loss

)

)

 Less: Net loss attributable to noncontrolling interest

 ( 247,351
)

 ( 136,705
)

 Net loss attributable to Sanara MedTech
 shareholders

 $
 ( 9,664,547
)

 $
 ( 4,303,197
)

 Net loss per share of common stock, basic and diluted

 $
 ( 1.14
)

 $
 ( 0.52
)

 Weighted average number of common shares outstanding, basic and diluted

 8,484,224

 8,278,949

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

 F- 5

 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY

 Shares

 Amount

 Capital

 Deficit

 Interest

 Equity

 Common
 Stock
 $0.001
 par value

 Additional
 Paid-In

 Accumulated

 Noncontrolling

 Total
 Shareholders'

 Shares

 Amount

 Capital

 Deficit

 Interest

 Equity

 Balance at December 31, 2022

 8,299,957

 $
 8,300

 $
 65,213,987

 $
 ( 23,394,757
)

 $
 ( 107,555
)

 $
 41,719,975

 Share-based compensation

 100,829

 3,442,622

 -

 -

 3,442,722

 Net settlement and retirement of equity-based awards

 34,501

 203,031

 ( 338,860
)

 -

 ( 135,794
)

 Issuance of common stock for acquisitions

 73,809

 3,089,571

 -

 -

 3,089,645

 Issuance of common stock in equity offering

 26,143

 911,345

 -

 -

 911,371

 Net loss

 -

 -

 -

 ( 4,303,197
)

 ( 136,705
)

)

 Balance at December 31, 2023

 8,535,239

 $
 8,535

 $
 72,860,556

 $
 ( 28,036,814
)

 $
 ( 244,260
)

 $
 44,588,017

 Balance

 8,535,239

 $
 8,535

 $
 72,860,556

 $
 ( 28,036,814
)

 $
 ( 244,260
)

 $
 44,588,017

 Share-based compensation

 164,451

 4,435,883

 -

 -

 4,436,048

 Net settlement and retirement of equity-based awards

 54,083

 ( 42,228
)

 ( 83,031
)

 -

 ( 125,205
)

 Issuance of common stock in equity offering

 -

 -

 ( 75,000
)

 -

 -

 ( 75,000
)

 Net loss

 -

 -

 -

 ( 9,664,547
)

 ( 247,351
)

)

 Balance at December 31, 2024

 8,753,773

 $
 8,754

 $
 77,179,211

 $
 ( 37,784,392
)

 $
 ( 491,611
)

 $
 38,911,962

 Balance

 8,753,773

 $
 8,754

 $
 77,179,211

 $
 ( 37,784,392
)

 $
 ( 491,611
)

 $
 38,911,962

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

 F- 6

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 2024

 2023

 Year Ended December 31,

 2024

 2023

 Cash flows from operating activities:

 Net loss

 $
)

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Credit loss expense

 624,448

 202,941

 Inventory obsolescence

 521,757

 406,812

 Share-based compensation

 4,436,048

 3,442,722

 Noncash lease expense

 547,297

 342,972

 Share of losses from equity method investments

 -

 Gain on disposal of investment

 -

 ( 251,034
)

 Back-end fee

 358,086

 -

 Paid-in-kind interest

 838,965

 -

 Accretion of finance liabilities

 210,931

 98,926

 Amortization and write-off of debt issuance costs

 209,499

 5,138

)

 ( 3,449,895
)

 Accrued interest income

 ( 21,978
)

 -

 Changes in operating assets and liabilities:

 Accounts receivable, net

 ( 4,508,958
)

 ( 1,821,895
)

 Accounts receivable – related parties

 ( 32,166
)

 90,148

 Inventory, net

 1,442,744

 ( 1,545,339
)

 Prepaid and other assets

 ( 515,496
)

 496,200

 Accounts payable

 ( 424,318
)

 531,380

 Accounts payable – related parties

 ( 46,891
)

 43,768

 Accrued royalties and expenses

 574,189

 ( 739,645
)

 Accrued bonuses and commissions

 3,102,069

 ( 81,513
)

 Operating lease liabilities

 ( 502,892
)

 ( 252,366
)

 Net cash used in operating activities

 ( 23,784
)

 ( 3,245,556
)

 Cash flows from investing activities:

 Purchases of property and equipment

 ( 205,848
)

 ( 265,246
)

 Purchases of intangible assets

 ( 23,452

)

 -

 Proceeds from disposal of property and equipment

 -

 Investment in equity securities

 ( 5,302,952
)

 -

 Convertible loan receivable

 ( 1,079,391
)

 -

 Acquisitions, net of cash acquired

 -

 ( 9,942,750
)

 Net cash used in investing activities

 ( 6,611,643
)

 ( 10,207,346
)

 Cash flows from financing activities:

 Loan proceeds, net of debt issuance costs of $ 1,160,740 in 2024 and $ 61,658 in 2023

 29,339,260

 9,688,341

 Pay off line of credit

 ( 9,750,000
)

 -

 Equity offering net proceeds (expenses)

 ( 75,000
)

 911,371

 Net settlement of equity-based awards

 ( 125,205
)

 ( 135,794
)

 Cash payment of finance and earnout liabilities

 ( 2,022,549
)

 ( 822,795
)

 Net cash provided by financing activities

 17,366,506

 9,641,123

 Net increase (decrease) in cash

 10,731,079

 ( 3,811,779
)

 Cash, beginning of period

 5,147,216

 8,958,995

 Cash, end of period

 $
 15,878,295

 $
 5,147,216

 Cash paid during the period for:

 Interest

 $
 1,580,984

 $
 283,948

 Supplemental noncash investing and financing activities:

 Right of use assets obtained in exchange for lease obligations

 -

 1,531,773

 Equity issued for acquisitions

 -

 3,089,645

 Earnout and other liabilities generated by acquisitions

 -

 3,759,642

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

 F- 7

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 1 – NATURE OF BUSINESS AND BACKGROUND

 Sanara MedTech Inc. (together with its wholly owned
and majority owned subsidiaries on a consolidated basis, the "Company") is a medical technology company focused on developing
and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic
wound and skincare markets. Each of the Company's products, services and technologies are designed to achieve the Company's
goal of providing better clinical outcomes at a lower overall cost for patients, regardless of where they receive care. Through its two
operating segments, Sanara Surgical and Tissue Health Plus ("THP"), the Company strives to be one of the most innovative
and comprehensive providers of effective surgical, wound and skincare solutions and is continually seeking to expand its offerings for
patients requiring treatments across the entire continuum of care in the United States.

 As further discussed in Note 14, the Company historically managed its business on the basis of one operating
and reportable segment. During the second quarter of 2024, the Company changed its
reportable segments to reflect a change in the manner in which the business is managed. Based on the growing importance of the value-based
wound care program to the Company's future outlook and how the Company's chief operating decision maker, the Chief Executive
Officer, reviews operating results and makes decisions about resource allocation, the Company now has two reportable segments: Sanara
Surgical and THP.

 The Sanara Surgical segment primarily markets and
sells soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Sanara Surgical's
soft tissue repair products include, among other products, the Company's lead product, CellerateRX Surgical Activated Collagen
("CellerateRX Surgical"), a hydrolyzed collagen that provides a moist environment for surgical sites to aid in the natural
wound healing process, and BIASURGE Advanced Surgical Solution, a sterile no-rinse, advanced surgical solution used for wound irrigation.
Sanara Surgical's bone fusion products include, among other products, BiFORM, an osteoconductive, bioactive, porous implant that
allows for bony ingrowth across the graft site, and ALLOCYTE Plus, a human allograft cellular bone matrix containing bone-derived progenitor
cells and conformable bone fibers.

 Sanara Surgical also includes an in-house research
and development team, Rochal Technologies, with an extensive pipeline of innovative products under development.

 Tissue Health Plus

 Through the Company's subsidiary, Tissue Health
Plus (formerly known as "WounDerm" and "United Wound and Skin Solutions, LLC"), the Company is seeking to simplify
skin health, starting with wound care through a refined business plan. Through THP, the Company plans to offer a first of its kind value-based
wound care program to payers and risk-bearing entities such as accountable care organizations and value-based primary care companies,
with Medicare Advantage payers as the initial target market for this program. The THP segment is focused on value-based wound care services.
Through THP, the Company plans to offer a first of its kind value-based wound care program to payers and risk-bearing entities such as
accountable care organizations and value-based primary care companies, with Medicare Advantage payers as the initial target market for
this program.

 THP's programs are expected to enable payers
to divest wound care spend risk, reduce wound related hospitalizations and improve patient quality of life. THP plans to coordinate delivery
of community and home-based wound care for its managed patients. Community-based care spans a variety of settings including physician
offices, skilled nursing facilities, assisted living facilities and senior living facilities. THP's programs are intended to integrate
science and evidence-based medicine protocols to standardize wound prevention and treatment.

 As a result of the change in reportable segments,
certain prior period amounts have been recast to conform to the current period presentation. Throughout this Annual Report on Form 10-K,
unless otherwise indicated, amounts and activity reflect reclassifications related to the Company's change in reportable segments.
The change in reportable segments had no impact on the Company's previously reported Consolidated Balance Sheets, Consolidated
Statements of Operations, Consolidated Statements of Cash Flows or Consolidated Statements of Shareholders' Equity.

 F- 8

 NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles of Consolidation and Basis of Presentation

 The accompanying consolidated financial statements
include the accounts of Sanara MedTech Inc. and its wholly owned and majority-owned subsidiaries, as well as other entities in which
the Company has a controlling financial interest. All significant intercompany profits, losses, transactions and balances have been eliminated
in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation.

 Use of Estimates

 The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and
the reported revenue and expenses during the reporting period. However, actual results could differ from those estimates and there may
be changes to the Company's estimates in future periods.

 Cash and Cash Equivalents

 The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents.

 Income/Loss Per Share

 The Company computes income/loss per share in accordance
with Accounting Standards Codification ("ASC") Topic 260, Earnings per Share, which requires the Company to present basic
and diluted income per share when the effect is dilutive. Basic income/loss per share is computed by dividing income/loss attributable
to common shareholders by the weighted average number of shares of common stock outstanding. Diluted income/loss per share is computed
similarly to basic income/loss per share, except that the denominator is increased to include the number of additional shares of common
stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common
stock were dilutive. All common stock equivalents were excluded from the calculations for the periods presented as their inclusion would
have been anti-dilutive during the years ended December 31, 2024 and 2023 due to the Company's net loss.

 The following table summarizes the shares of common
stock that were potentially issuable but were excluded from the computation of diluted net loss per share for the years ended December 31,
2024 and 2023 as such shares would have had an anti-dilutive effect:

OF COMPUTATION OF DILUTED NET LOSS PER SHARE

 2024

 2023

 As of December 31,

 2024

 2023

 Stock options (a)

 31,013

 93,892

 Warrants (b)

 —

 16,725

 Unvested restricted stock

 202,787

 144,211

 Anti-dilutive
 securities

 202,787

 144,211

 (a)
 Shares underlying stock options assumed pursuant to the merger agreement
 with Precision Healing, Inc. ("Precision Healing") in April 2022.

 (b)
 Shares underlying warrants assumed pursuant to the merger agreement
 with Precision Healing in April 2022.

 Revenue Recognition

 The Company recognizes revenue in accordance with
ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). Revenues are recognized when a purchase order is received
from the customer and control of the promised goods or services is transferred to the customer in an amount that reflects the consideration
the Company expects to be entitled to receive in exchange for transferring those goods or services. Revenue is recognized based on the
following five-step model:

 -
 Identification of the contract with a customer

 F- 9

 -
 Identification of the performance obligations
 in the contract

 -
 Determination of the transaction price

 -
 Allocation of the transaction price to the performance
 obligations in the contract

 -
 Recognition of revenue when, or as, the Company
 satisfies a performance obligation

 Details of this five-step process are as follows:

 Identification of the contract with a customer

 Customer purchase orders are generally considered
to be contracts under ASC 606. Purchase orders typically identify the specific terms of products to be delivered, create the enforceable
rights and obligations of both parties and result in commercial substance. No other forms of contract revenue recognition, such as the
completed contract or percentage of completion methods, were utilized by the Company in either 2024 or 2023.

 Performance obligations

 The Company's performance obligation is generally
limited to delivery of the requested items to its customers at the agreed upon quantities and prices.

 Determination and allocation of the transaction price

 The Company has established prices for its products.
These prices are effectively agreed to when customers place purchase orders with the Company. Rebates and discounts, if any, are recognized
in full at the time of sale as a reduction of net revenue. Allocation of transaction prices is not necessary where only one performance
obligation exists. For certain sales transactions, we incur group purchasing organization fees that are based on a contractual percentage
of applicable sales and are recorded as a reduction of the revenue for those transactions.

 Recognition of revenue as performance obligations are satisfied

 Product revenues are recognized when a purchase order
is received from the customer, the products are delivered, and control of the goods and services passes to the customer.

 Disaggregation of Revenue

 Revenue streams from product sales and royalties
are summarized below for the years ended December 31, 2024 and 2023.

 SCHEDULE OF REVENUE FROM PRODUCT SALES AND ROYALTIES

 2024

 2023

 2024

 2023

 Soft tissue repair products

 $
 76,125,012

 $
 54,836,410

 Bone fusion products

 10,547,413

 9,952,432

 Royalty revenue

 —

 201,000

 Total Net Revenue

 $

 $

 For the years ended December 31, 2024 and
2023, all of the Company's net revenue was generated from Sanara Surgical. The Company is preparing to launch the first THP
pilot program with a wound care provider group during the second quarter of 2025.

 Accounts Receivable Allowances

 Accounts receivable are typically due within 30
days of invoicing. The Company establishes an allowance for credit losses to provide for an estimate of accounts receivable which
are not expected to be collectible. The Company bases the allowance on an assessment of customer creditworthiness, historical
payment experience, the age of outstanding receivables and other information as applicable and will record its allowance based on
the estimated credit losses. The Company's accounts receivable balance, net was $ 12,408,819, $ 8,474,965, and $ 6,805,761 as of December
31, 2024, December 31, 2023, and December 31, 2022, respectively. The Company recorded credit loss expense of $ 624,448
and $ 202,941
during the years ended December 31, 2024 and 2023, respectively. The allowance for credit losses was $ 1,173,441
at December 31, 2024 and $ 528,030
at December 31, 2023. Credit loss reserves are maintained based on a variety of factors, including the length of time
receivables are past due and a detailed review of certain individual customer accounts. The Company also establishes other
allowances to provide for estimated customer rebates and other expected customer deductions. These allowances totaled $ 4,897
at December 31, 2024 and $ 3,820
at December 31, 2023. If circumstances related to customers change, estimates of the recoverability of receivables would be
further adjusted.

 F- 10

 Inventories

 Inventories are stated at the lower of cost or net
realizable value, with cost computed on a first-in, first-out basis. Inventories consist primarily of finished goods, and also include
an immaterial amount of raw materials and related packaging components. The Company recorded inventory obsolescence expense of $ 521,757
and $ 406,812 during the years ended December 31, 2024 and 2023, respectively. The allowance for obsolete and slow-moving inventory
had a balance of $ 534,549 at December 31, 2024 and $ 446,917 at December 31, 2023.

 Property and Equipment

 Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets, ranging
from two to ten years. Below is a summary of property and equipment for the periods presented:

OF PROPERTY AND EQUIPMENT

 Useful
 Life

 2024

 2023

 Computers

 3 - 5 years

 $
 295,963

 $
 194,788

 Office equipment

 3 - 7 years

 216,491

 201,785

 Furniture and fixtures

 5 - 10 years

 346,508

 304,338

 Leasehold improvements

 2 - 5 years

 181,968

 134,170

 Internal use software

 5 years

 —

 1,618,999

 Property and equipment, gross

 1,040,930

 2,454,080

 Less accumulated depreciation

 ( 608,613
)

 ( 1,196,124
)

 Property and equipment, net

 $
 432,317

 $
 1,257,956

 Depreciation expense related to property and equipment
was $ 1,031,487 and $ 456,138 during the year ended December 31, 2024 and 2023, respectively. Depreciation expense for the year ended
December 31, 2024 included a non-cash charge of $ 506,836 to write-off the remaining net book value of certain internal use software
assets.

 Internal Use Software

 The Company accounted for costs incurred to develop
or acquire computer software for internal use in accordance with ASC Topic 350-40, Intangibles – Goodwill and Other. The Company
capitalized the costs incurred during the application development stage, which generally included third-party developer fees to design
the software configuration and interfaces, coding, installation and testing.

 The Company began capitalization of qualifying costs
when both the preliminary project stage was completed and management authorized further funding for the completion of the project. Costs
incurred during the preliminary project stage along with post implementation stages of internal-use computer software was expensed as
incurred. The Company also capitalized costs related to specific upgrades and enhancements when it was probable the expenditures would
result in additional functionality. Capitalized development costs were classified as "Property and equipment, net" in the
Consolidated Balance Sheets and were depreciated over the estimated useful life of the software, which was generally five years.

 Goodwill

 The excess of purchase price over the fair value
of identifiable net assets acquired in business combinations is recorded as goodwill. As of December 31, 2024 and December 31,
2023, all of the Company's goodwill relates to the acquisition of Scendia Biologics, LLC ("Scendia"), which is included
in the Sanara Surgical segment. Goodwill has an indefinite useful life and is not amortized. Goodwill is tested annually as of December 31
for impairment, or more frequently if circumstances indicate impairment may have occurred. The Company may first perform a qualitative
assessment to determine if it is more likely than not that the fair value of the reporting unit is less than the respective carrying
value. If it is determined that it is more likely than not that a reporting unit's fair value is less than its carrying value,
then the Company will determine the fair value of the reporting unit and record an impairment charge for the difference between fair
value and carrying value (not to exceed the carrying amount of goodwill). No impairment was recorded during the year ended December 31,
2024 or 2023.

 F- 11

 Intangible Assets

 Intangible assets are stated at cost of acquisition
less accumulated amortization and impairment loss, if any. Cost of acquisition includes the purchase price and any cost directly attributable
to bringing the asset to its working condition for the intended use. The Company amortizes its finite-lived intangible assets on a straight-line
basis over the estimated useful life of the respective assets which is generally the life of the related patents or licenses, seven years
for customer relationships and five years for assembled workforces. See Note 5 for more information on intangible assets.

 Impairment of Long-Lived Assets

 Long-lived assets, including certain identifiable
intangibles held and to be used by the Company, are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of such assets may not be recoverable. The Company continuously evaluates the recoverability of its long-lived assets
based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such
undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment
is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.
Fair values are determined based on quoted market values, undiscounted cash flows or internal and external appraisals, as applicable.
Assets to be disposed of are carried at the lower of carrying value or estimated fair value less cost to sell. A $ 0.5 million non-cash
charge to write-off the remaining net book value of certain THP internal use software assets was recorded during the year ended December 31,
2024. No impairment was recorded during the year ended December 31, 2023.

 Investments in Equity Securities

 The Company's equity investments consist of
nonmarketable equity securities in privately held companies without readily determinable fair values. Unless accounted for under the
equity method of accounting, the investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable
price changes in orderly transactions for the identical or similar investment in the same issuer.

 The Company applies the equity method of accounting
to investments when it has significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence
over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors,
participation in policy-making decisions and material intercompany transactions. As discussed further in Note 6 as of December 31,
2024, the Company had two investments that are recorded applying the equity method of accounting. The Company's proportionate share
of the net income (loss) resulting from these investments is reported under the line item captioned "Share of losses from equity
method investments" in the Company's Consolidated Statements of Operations. The Company's equity method investments
are adjusted each period for the Company's share of the investee's income or loss and dividend paid, if any. The Company
classifies distributions received from its equity method investments using the cumulative earnings approach in the Company's Consolidated
Statements of Cash Flows.

 The Company has reviewed the carrying value of its
investments and has determined there was no impairment or observable price changes as of or for the year ended December 31, 2024
and 2023.

 Fair Value Measurement

 As defined in ASC Topic 820, Fair Value Measurement
("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market
participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the
valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair
value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level
3 measurement). This fair value measurement framework applies at both the initial and subsequent measurement.

 The three levels of the fair value hierarchy defined
by ASC 820 are as follows:

 Level 1 – Quoted prices are available in active
markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or
liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of
financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 F- 12

 Level 2 – Pricing inputs are other than quoted
prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes
those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard
models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current
market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these
assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are
supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include
nonexchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 Level 3 – Pricing inputs include significant
inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that
result in management's best estimate of fair value.

 The carrying amounts of cash, accounts receivable,
accounts payable and accrued expenses, other than acquisition-related expenses, approximate fair value because of the short-term nature
of these instruments. The fair value of acquisition-related accrued expenses is categorized as Level 2 of the fair value hierarchy. The
value of these instruments has been estimated using discounted cash flow analysis based on the Company's incremental borrowing
rate. The carrying value of the Company's CRG Term Loan (defined below), which has a fixed interest rate approximates fair value
based on instruments with similar terms (Level 2 inputs). The fair value of the contingent earnout consideration and the acquisition
date fair value of goodwill and intangibles related to the acquisitions discussed in Notes 3 and 5 are based on Level 3 inputs.

 Liabilities for contingent consideration for the
Precision Healing merger, acquisition of Scendia and Applied Asset Purchase (defined below) (see Note 3 for more information) are measured
at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred. The contingent
consideration for the Scendia acquisition was settled as of September 30, 2024, and the final earnout payment of approximately $1.1 million
was paid in cash in October 2024. The Precision Healing contingent consideration is classified as a liability at its fair value at each
reporting period due to the fact that the monetary value of the shares to be issued is predominantly dependent on the exercise contingency
(i.e., revenue targets). Subsequent changes in fair value of contingent consideration related to the Precision Healing merger are reported
under the line item captioned "Change in fair value of earnout liabilities" in the Company's Consolidated Statements
of Operations. The Company reviewed the thresholds necessary to trigger a payment on the Precision Healing earnout as of December 31,
2024 and deemed the thresholds to be unachievable by the sellers, therefore, the remaining fair value on the earnout was reduced to zero.
Due to the Applied Asset Purchase being accounted for as an asset acquisition and given that the transaction did not include contingent
shares, subsequent revaluations of contingent consideration for the Applied Asset Purchase results in an adjustment to the contingent
consideration liability and the intellectual property intangible asset with a cumulative catch-up amortization adjustment. The current
year change in fair value of earnout liability below is as a result of a net decrease in the estimated fair value of the earnout liability
established at the time of the Company's Precision Healing merger. The current year revaluation of earnout liability below is a
result of a decrease in the estimated value of the earnout liability established at the time of the Applied Asset Purchase. The following
table sets forth a summary of the changes in fair value for the Level 3 contingent earnout considerations.

OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION

 Balance at December 31, 2023

 $
 3,823,001

)

 Revaluation of earnout liability

 ( 51,000
)

 Settlements

 ( 1,085,549
)

 Balance at December 31, 2024

 $
 748,001

 Income Taxes

 Income taxes are accounted for under the asset and
liability method, whereby deferred income taxes are recorded for temporary differences between financial statement carrying amounts and
the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years
in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all the
deferred tax asset will not be realized.

 F- 13

 Share-based Compensation

 The Company accounts for share-based compensation
to employees and nonemployees in accordance with ASC Topic 718, Compensation – Stock Compensation. Share-based compensation is
measured at the grant date, based on the fair value of the award, and is recognized as expense over the stipulated vesting period, if
any. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model for common stock options
and warrants, and the closing price of the Company's common stock for grants of common stock, including restricted stock awards.

 Research and Development Costs

 Research and development ("R&D")
expenses consist of personnel-related expenses, including salaries, share-based compensation and benefits for all personnel directly
engaged in R&D activities, contracted services, materials, prototype expenses and allocated overhead, which is comprised of compensation
and benefits, lease expense and other facilities-related costs. R&D expenses include costs related to enhancements to the Company's
currently available products and additional investments in the product and platform development pipeline. The Company expenses R&D
costs as incurred.

 Recently Adopted Accounting Pronouncements

 In June 2016, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic
326). This update amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate
credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The Company
adopted the new guidance effective January 1, 2023. The adoption did not have a material impact on the Company's consolidated financial
position, results of operations or cash flows.

 In November 2023, FASB issued ASU 2023-07, Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires disclosure of incremental
segment information on an annual and interim basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and
interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company adopted the new guidance
effective December 31, 2024. The adoption did not have a material impact on the Company's consolidated financial position, results
of operations or cash flows.

 Recently Issued Accounting Pronouncements

 In December 2023, FASB issued ASU 2023-09, Income
Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which expands the disclosure required for income
taxes. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently
evaluating the effect of this pronouncement on its disclosures.

 In November 2024, FASB issued ASU 2024-03, Income
Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,
which requires new disclosures providing further detail of a company's income statement expense line items. ASU 2024-03 is effective
for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is
permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 NOTE 3 – APPLIED ASSET PURCHASE

 On August 1, 2023, the Company entered into
an Asset Purchase Agreement (the "Applied Purchase Agreement") by and among the Company, as guarantor, Sanara MedTech Applied
Technologies, LLC, a Texas limited liability company and wholly owned subsidiary of the Company ("SMAT"), The Hymed Group
Corporation, a Delaware corporation ("Hymed"), Applied Nutritionals, LLC, a Delaware limited liability company ("Applied",
and together with Hymed, the "Sellers"), and Dr. George D. Petito (the "Owner"), pursuant to which SMAT acquired
certain assets of the Sellers and the Owner, including, among others, the Sellers' and Owner's inventory, intellectual property,
manufacturing and related equipment, goodwill, rights and claims, other than certain excluded assets, all as more specifically set forth
in the Applied Purchase Agreement (collectively, the "Applied Purchased Assets"), and assumed certain Assumed Liabilities
(as defined in the Applied Purchase Agreement), upon the terms and subject to the conditions set forth in the Applied Purchase Agreement
(such transaction, the "Applied Asset Purchase"). The Applied Purchased Assets include the underlying intellectual property
of, as well as the rights to manufacture and sell, certain hydrolyzed collagen products, including CellerateRX Surgical, for human wound
care use.

 F- 14

 The Applied Purchased Assets were purchased for an
initial aggregate purchase price of $ 15.25 million, consisting of (i) $ 9.75 million in cash (the "Cash Closing Consideration"),
(ii) 73,809 shares of the Company's common stock (the "Stock Closing Consideration") with an agreed upon value of $ 3.0
million and (iii) $ 2.5 million in cash (the "Installment Payments"), to be paid in four equal installments on each of the
next four anniversaries of the closing of the Applied Asset Purchase (the "Closing"). The first Installment Payment of $ 625,000
was made in August 2024.

 Prior to the Closing, the Company licensed certain
of its products from Applied through a sublicense agreement (the "Sublicense Agreement") with CGI Cellerate RX, LLC ("CGI
Cellerate RX"), a related party (see Note 13 for additional information regarding transactions with related parties). Pursuant
to the Sublicense Agreement, the Company had an exclusive, world-wide sublicense to distribute certain hydrolyzed collagen products,
including CellerateRX Surgical, into the surgical and wound care markets. In connection with the Applied Asset Purchase, Applied assigned
its license agreement with CGI Cellerate RX to SMAT (the "License Agreement"), and on October 10, 2024, the License Agreement
and the Sublicense Agreement were terminated for no additional consideration.

 In addition to the Cash Closing Consideration, Stock
Closing Consideration and Installment Payments, the Applied Purchase Agreement provides that the Sellers are entitled to receive up to
an additional $ 10.0 million (the "Applied Earnout"), which is payable to the Sellers in cash, upon the achievement of certain
performance thresholds relating to SMAT's collections from net sales of a collagen-based product currently under development. Upon
expiration of the seventh anniversary of the Closing, to the extent the Sellers have not earned the entirety of the Applied Earnout,
SMAT shall pay the Sellers a pro-rata amount of the Applied Earnout based on collections from net sales of the product, with such amount
to be due credited against any Applied Earnout payments already made by SMAT (the "True-Up Payment"). The Applied Earnout,
minus the True-Up Payment and any Applied Earnout payments already made by SMAT, may be earned at any point in the future, including
after the True-Up Payment is made.

 In connection with the Applied Asset Purchase and
pursuant to the Applied Purchase Agreement, effective August 1, 2023, the Company entered into a professional services agreement (the
"Petito Services Agreement") with the Owner, pursuant to which the Owner, as an independent contractor, agreed to provide
certain services to the Company, including, among other things, assisting with the development of products already in development and
assisting with research, development, formulation, invention and manufacturing of any future products (the "Petito Services").
 As consideration for the Petito Services, the Owner is entitled to receive: (i) a base salary of $12,000 per month during the term of
the Petito Services Agreement, (ii) a royalty payment equal to three percent (3%) of the actual collections from net sales of certain
products the Owner develops or co-develops that reach commercialization, (iii) a royalty payment equal to five percent (5%) for the first
$50.0 million in aggregate collections from net sales of certain future products and a royalty payment of two and one-half percent (2.5%)
on aggregate collections from net sales of certain future products on any amounts exceeding $50.0 million but up to $100.0 million, (iv)
$500,000 in cash in the event that 510(k) clearance is issued for any future product accepted by the Company and (v) $1.0 million in
cash in the event that a U.S. patent is issued for a certain product; provided that with respect to the incentive payments described
in (iv) and (v) of the foregoing, the Owner shall not earn more than $2.5 million.

 The Petito Services Agreement has an initial term
of three years and is subject to automatic successive one-month renewals unless earlier terminated in accordance with its terms. The
Petito Services Agreement may be terminated upon the Owner's death or disability or by the Company or the Owner "For Cause"
(as defined in the Petito Services Agreement); provided, however, that the base salary described in (i) of the foregoing paragraph shall
survive termination through the three-year initial term and the royalty payments and incentive payments described in (ii)-(v) of the
foregoing paragraph shall survive termination of the Petito Services Agreement.

 As the contingent consideration was negotiated as
part of the transfer of assets, the contingent obligation was measured at fair value and included in the total purchase consideration
transferred. Accordingly, since the Applied Asset Purchase was accounted for as an asset acquisition and did not include contingent shares,
the contingent consideration is classified as a liability at its estimated fair value at each reporting period with subsequent revaluations
recognized as an adjustment to the intellectual property intangible asset and the earnout liability with a cumulative catch-up amortization
adjustment.

 F- 15

 The total purchase consideration for the Applied
Asset Purchase as determined by the Company was as follows:

OF ASSET PURCHASE CONSIDERATIONS

 Consideration

 Equity Shares

 Dollar Value

 Cash Closing Consideration

 $
 9,750,000

 Fair value of Stock Closing Consideration

 73,809

 3,089,645

 Fair value of Installment Payments

 2,040,808

 Cash paid for inventory

 30,007

 Fair value of Petito Services Agreement defined payments

 825,834

 Fair value of Petito Services Agreement contingent consideration

 893,000

 Direct transaction costs

 162,743

 Total purchase consideration

 $
 16,792,037

 Based on guidance provided by ASC 805, Business Combinations
("ASC 805"), the Company recorded the Applied Asset Purchase as an asset acquisition due to the determination that substantially
all the fair value of the assets acquired was concentrated in a group of similar identifiable assets. The Company believes the "substantially
all" criterion was met with respect to the acquired intellectual property being the only significant asset acquired. Accordingly,
the Company accounted for the transaction as an asset acquisition.

 The purchase consideration, plus transaction costs,
was allocated to the individual assets according to their fair values as a percentage of the total fair value of the assets purchased,
with no goodwill recognized. Based on the estimated fair value of the gross assets acquired, the total fair value of the net assets acquired
was primarily attributable to, and classified as, finite-lived intellectual property in the fourth quarter of 2023. The total purchase
consideration was allocated based on the relative estimated fair value of such assets as follows:

OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED

 Description

 Amount

 Inventory

 $
 30,007

 Equipment

 33,062

 Intellectual property

 16,728,968

 Net assets acquired

 $
 16,792,037

 NOTE 4 – CONVERTIBLE LOAN RECEIVABLE

 In connection with a potential equity investment
in an unaffiliated entity engaged in the development of certain surgical technologies, the Company entered into a convertible loan agreement
in July 2024 pursuant to which the Company loaned $ 1,079,391 to the unaffiliated entity. The loan was initially set to be repaid on October 1, 2024. However, the Company extended the repayment date to January 15, 2025. On October 1, 2024, the Company began accruing
interest at 8 % per annum. Pursuant to the convertible loan agreement, the Company had the option to convert the outstanding balance of
the loan into noncontrolling equity interests of the unaffiliated entity upon satisfactory completion of certain due diligence activities.
As of December 31, 2024, the loan balance was $ 1,101,478 including accrued interest and is recorded under the caption "Convertible
loan receivable" in the Company's Consolidated Balance Sheets. As of January 16, 2025, the loan was converted into equity
of the unaffiliated entity (see Note 15 for additional information).

 F- 16

 NOTE 5 – GOODWILL AND INTANGIBLES, NET

 The changes in the carrying amount of the Company's
goodwill were as follows:

OF CHANGES IN CARRYING AMOUNT OF GOODWILL

 Total

 Balance as of December 31, 2022

 $

 Acquisitions

 -

 Balance as of December 31, 2023

 Balance

 Acquisitions

 -

 Balance as of December 31, 2024

 $

 Balance

 $

 In connection with the change in reportable operating
segments, the Company reassessed goodwill with respect to the change in reportable operating segments as they are presented in this report.
Goodwill was recorded in connection with the acquisition of Scendia and is included entirely within the Sanara Surgical segment. The
Company's assessment determined that these changes, or any other matters noted, did not alter the Company's conclusion that
goodwill is not impaired as of December 31, 2024 or 2023.

 The carrying values of the Company's intangible
assets were as follows for the periods presented:

OF CARRYING VALUE OF INTANGIBLE ASSETS

 December 31, 2023

 Cost

 Accumulated
Amortization

 Net

 Cost

 Accumulated
Amortization

 Net

 Amortizable Intangible Assets:

 Patents and Other IP

 $
 38,009,240

 $
 ( 5,008,856
)

 $
 33,000,384

 $
 38,570,549

 $
 ( 3,181,186
)

 $
 35,389,363

 Customer relationships and other

 7,948,299

 ( 3,007,118
)

 4,941,181

 7,947,332

 ( 1,861,887
)

 6,085,445

 Product Licenses

 4,793,879

 ( 1,728,668
)

 3,065,211

 4,793,879

 ( 1,342,626
)

 3,451,253

 Total

 $
 50,751,418

 $
 ( 9,744,642
)

 $
 41,006,776

 $
 51,311,760

 $
 ( 6,385,699
)

 $
 44,926,061

 As of December 31, 2024, the weighted-average
amortization period for finite-lived intangible assets was 14.6 years. Amortization expense related to intangible assets was $ 3,891,737
and $ 3,218,888 for the year ended December 31, 2024 and 2023, respectively. The estimated remaining amortization expense as of December 31,
2024 for finite-lived intangible assets is as follows:

OF FUTURE AMORTIZATION EXPENSE

 2025

 $
 3,894,221

 2026

 3,876,965

 2027

 3,763,113

 2028

 3,722,054

 2029

 3,722,054

 Thereafter

 22,028,369

 Total

 $
 41,006,776

 The Company has reviewed the carrying value of intangible
assets and has determined there was no impairment during the year ended December 31, 2024 or 2023.

 NOTE 6 – INVESTMENTS IN EQUITY SECURITIES

 The Company's equity investments consist of
nonmarketable equity securities in privately held companies without readily determinable fair values. Unless accounted for under the
equity method of accounting, the investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable
price changes in orderly transactions for the identical or similar investment of the same issuer.

 F- 17

 DirectDerm

 In July 2020, the Company made a $ 500,000 long-term
investment to purchase certain nonmarketable securities consisting of 7,142,857 Series B-2 Preferred Shares of Direct Dermatology Inc.
("DirectDerm"), representing approximately 2.9 % ownership of DirectDerm at that time. Through this investment, the Company
received exclusive rights to utilize DirectDerm's technology in all acute and post-acute care settings such as skilled nursing
facilities, home health and wound clinics. In 2021, the Company purchased an additional 3,571,430 shares of DirectDerm's Series
B-2 Preferred for $ 250,000. In March 2022, the Company purchased an additional 3,571,429 shares of DirectDerm's Series B-2 Preferred
for $ 250,000. The Company's ownership of DirectDerm was approximately 8.1 % as of December 31, 2024. The Company does not have
the ability to exercise significant influence over DirectDerm's operating and financial activities. In accordance with ASC Topic
321, Investments - Equity Securities ("ASC 321"), this investment was reported at cost as of December 31, 2024.

 Pixalere

 In June 2021, the Company invested $ 2,084,278 to
purchase 278,587 Class A Preferred Shares (the "Pixalere Shares") of Canada based Pixalere Healthcare Inc. ("Pixalere").
The Pixalere Shares are convertible into approximately 27.3 % of the outstanding equity of Pixalere. Pixalere provides a cloud-based wound
care software tool that empowers nurses, specialists and administrators to deliver better care for patients. In connection with the Company's
purchase of the Pixalere Shares, Pixalere granted Pixalere Healthcare USA, LLC ("Pixalere USA"), a subsidiary of the Company,
a royalty-free exclusive license to use the Pixalere software and platform in the United States. In conjunction with the grant of the
license, the Company issued Pixalere a 27.3 % equity ownership interest in Pixalere USA valued at $ 93,879.

 The Company reviewed the characteristics of the Pixalere
Shares in accordance with ASC Topic 323, Investments – Equity Method and Joint Ventures ("ASC 323"). Due to the substantive
liquidation preferences of the Pixalere Shares over Pixalere's common stock, the Pixalere Shares are not "in-substance"
common stock, and therefore, the Company does not utilize the equity method of accounting for this investment. In accordance with ASC
321, this investment was reported at cost as of December 31, 2024.

 ChemoMouthpiece

 In September 2024, the Company, through its wholly
owned subsidiary, Sanara CMP LLC ("Sanara CMP"), entered into a Unit Purchase Agreement (the "Unit Purchase Agreement")
with ChemoMouthpiece, LLC ("CMp"), pursuant to which Sanara CMP purchased 100,674.72 common units in CMp for an aggregate
purchase price of $ 5.0 million, or $ 49.6649 per unit, which represented approximately 6.64 % of the issued and outstanding membership
interest of CMp immediately following such purchase. Subsequent to the Company's initial investment in CMp, units of CMp were sold
to other investors, thereby decreasing the Company's ownership of CMp to 6.59 % as of December 31, 2024. CMp is a privately
held medical device company that develops and commercializes propriety oral cryotherapy products for cancer patients, including, among
other things, CMp's Chemo Mouthpiece oral cryotherapy device, which is a 510(k) cleared cryotherapy device designed to reduce the
incidence and severity of chemotherapy induced oral mucositis.

 The Company has reviewed the characteristics of Sanara
CMP's investment in CMp in accordance with ASC 323 and determined that Sanara CMP made a non-controlling investment in a limited
liability company. According to the guidance provided in ASC 323-30-S99-1, investments in limited liability companies whereby an investor
holds more than a 3% to 5% ownership interest would generally be accounted for under the equity method of accounting. Therefore, the
Company utilized the equity method of accounting for this investment and recorded its initial investment at cost plus transaction costs.
Sanara CMP's share of the earnings or losses of CMp is recorded in the Company's Consolidated Statements of Operations.

 SI Technologies

 In November 2022, the Company established a 50/50
joint venture, SI Healthcare Technologies, LLC ("SI Technologies") (formerly known as SI Wound Care, LLC), with InfuSystem
Holdings, Inc. ("InfuSystem").

 In connection with the Unit Purchase Agreement with
CMp, the Company, CMp, certain subsidiaries of CMp, InfuSystem and SI Technologies, entered into an Exclusive Distribution Agreement
(the "Distribution Agreement") pursuant to which SI Technologies was appointed as the sole and exclusive U.S. distributor
of CMp's Standard Chemo Regiment Kits.

 F- 18

 The parties to the Distribution Agreement also entered
into an Intellectual Property Rights Agreement, pursuant to which SI Technologies was granted the exclusive right to use CMp's
intellectual property rights to permit resale and use of the CMp Product in the United States.

 The Company has reviewed the characteristics the
Company's investment in SI Technologies in accordance with ASC 323 and determined that the Company made a non-controlling investment
in a limited liability company. According to the guidance provided in ASC 323-30-S99-1, investments in limited liability companies whereby
an investor holds more than a 3% to 5% ownership interest would generally be accounted for under the equity method of accounting. Therefore,
the Company utilized the equity method of accounting for this investment and recorded its initial investment at cost. The Company's
share of the earnings or losses of SI Technologies is recorded in the Company's Consolidated Statements of Operations.

 The following table summarizes the Company's
investments for the periods presented:

OF INVESTMENTS

 December 31, 2023

 Carrying Amount

 Economic Interest

 Carrying Amount

 Economic Interest

 Equity Method Investments

 ChemoMouthpiece, LLC

 $
 5,172,242

 6.59
 %

 $
 -

 -
 %

 SI Healthcare Technologies, LLC

 40,703

 50.00
 %

 -

 -
 %

 Total Equity Method Investments

 $
 5,212,945

 $
 -

 Cost Method Investments

 Direct Dermatology, Inc.

 $
 1,000,000

 $
 1,000,000

 Pixalere Healthcare Inc.

 2,084,278

 2,084,278

 Total Cost Method Investments

 $
 3,084,278

 $
 3,084,278

 Total Investments

 $
 8,297,223

 $
 3,084,278

 The following table summarizes the Company's
share of losses from equity method investments reflected in the Company's Consolidated Statements of Operations for the periods
presented:

 SCHEDULE OF LOSS FROM EQUITY METHOD INVESTMENT

 2024

 2023

 Year
 Ended
 December
 31,

 2024

 2023

 Investments

 ChemoMouthpiece, LLC

 $
 ( 105,710
)

 $
 -

 SI Healthcare Technologies, LLC

 15,703

 -

 Total

 $
 ( 90,007
)

 $
 -

 Loss from equity method investment

 $
 ( 90,007
)

 $
 -

 NOTE 7 – OPERATING LEASES

 The Company periodically enters operating lease contracts
for office space and equipment. Arrangements are evaluated at inception to determine whether such arrangements constitute a lease. Right
of use assets ("ROU assets") represent the right to use an underlying asset for the lease term, and lease liabilities represent
the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities were recognized on the transition
date based on the present value of lease payments over the respective lease term, with the office space ROU asset adjusted for deferred
rent liability.

 F- 19

 As of December 31, 2024, the Company had two material
operating leases for office space. In March and September of 2023, the Company amended its primary office lease to obtain additional
space, as well as extend the term. The leases had remaining lease terms of 72 and eight months as of December 31, 2024. The Company is
evaluating its renewal options for the lease expiring in eight months. For practical expediency, the Company has elected to not recognize
ROU assets and lease liabilities related to short-term leases.

 In accordance with ASC Topic 842, Leases, the Company
has recorded ROU assets of $ 1,447,907 and a related lease liability of $ 1,595,738 as of December 31, 2024. The Company recorded
lease expense of $ 555,192 and $ 434,066 for the year ended December 31, 2024 and 2023, respectively. Cash paid for amounts included
in the measurement of operating lease liabilities was $ 505,017 and $ 380,576 for the year ended December 31, 2024 and 2023, respectively.

 The present value of the Company's operating
lease liabilities as of December 31, 2024 is shown below:

 Maturity of Operating Lease Liabilities

 SCHEDULE OF OPERATING LEASE LIABILITY

 2024

 2025

 $
 466,800

 2026

 300,369

 2027

 291,220

 2028

 295,689

 2029

 300,158

 Thereafter

 303,891

 Total lease payments

 1,958,127

 Less imputed interest

 ( 362,389
)

 Present Value of Lease Liabilities

 $
 1,595,738

 Operating lease liabilities – current

 $
 358,687

 Operating lease liabilities – long-term

 $
 1,237,051

 As of December 31, 2024, the Company's
operating leases had a weighted average remaining lease term of 5.5 years and a weighted average discount rate of 7.8 %.

 NOTE 8 – DEBT AND CREDIT FACILITIES

 CRG Term Loan Agreement

 On April 17, 2024 (the "Closing Date"),
the Company entered into a term loan agreement, by and among the Company, as borrower, the subsidiary guarantors party thereto from time
to time (collectively, the "Guarantors"), CRG Servicing LLC as administrative agent and collateral agent (the "Agent"),
and the lenders party thereto from time to time (the "CRG Term Loan Agreement"), providing for a senior secured term loan
of up to $ 55.0 million (the "CRG Term Loan"). As of December 31, 2024, the CRG Term Loan Agreement provided for (i) $ 15.0 million of the CRG Term
Loan that was borrowed on the Closing Date (the "First Borrowing") and (ii) up to an aggregate of $ 40.0 million available
for borrowing in two subsequent borrowings, provided that each such borrowing was required to be at least $5.0 million and occur between the Closing
Date and June 30, 2025, subject to the satisfaction of certain conditions, including the Agent having received certain fees. The Company used a portion of the initial proceeds of the First Borrowing under the CRG Term
Loan to extinguish the Cadence Term Loan described further below.

 On September 4, 2024, the Company, pursuant
to its option under the CRG Term Loan Agreement, borrowed an additional $ 15.5 million under the CRG Term Loan Agreement (the "Second
Borrowing"). The Company used $ 5.0 million of the proceeds of the Second Borrowing for its investment in CMp.

 The First Borrowing, Second Borrowing and any additional
borrowings under the CRG Term Loan are due and payable on March 30, 2029 (the "Maturity Date"), absent any acceleration.

 F- 20

 The CRG Term Loan bears interest at a per annum rate
equal to 13.25 % (subject to a 4.0 % increase during an event of default), of which 8.00 % must be paid in cash and 5.25 % may, at the election
of the Company, be deferred through the 19 th quarterly Payment Date (defined below) by adding such amount to the aggregate
principal loan amount, so long as no default or event of default under the CRG Term Loan Agreement has occurred and is continuing. The
Company is required to make quarterly interest payments on the final business day of each calendar quarter following the Closing Date,
commencing on the first such date to occur at least 30 days after the Closing Date (each, a "Payment Date"). Interest is
payable on each Payment Date in arrears with respect to the time between each Payment Date and upon the payment or prepayment of the
CRG Term Loan, ending on the Maturity Date. In addition, the Company is required to pay an upfront fee of 1.50 % of the principal amount
of the CRG Term Loan, which is payable as amounts are advanced under the CRG Term Loan on a pro rata basis. The Company is also required
to pay a back-end fee equal to 7.00 % of the aggregate principal amount advanced under the CRG Term Loan Agreement.

 For the year ended December 31, 2024, the Company
paid $ 1,278,424 of interest in cash and recorded $ 838,965 of interest paid-in-kind related to the CRG Term Loan. The paid-in-kind interest
was applied to the principal balance of the CRG Term Loan. The Company recorded $ 358,086 for the year ended December 31, 2024 to
interest expense related to the back-end fee. The back-end fee is accreted and amortized to interest expense over the term of the CRG
Term Loan. Paid-in-kind interest and the accreted back-end fee are included in "Long-term debt, net of current portion" in
the Consolidated Balance Sheets.

 Subject to certain exceptions, the Company is required
to make mandatory prepayments of the CRG Term Loan with the proceeds of certain assets sales and in the event of a change of control
of the Company. In addition, the Company may make a voluntary prepayment of the CRG Term Loan, in whole or in part, at any time. All
mandatory and voluntary prepayments of the CRG Term Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment
occurs on or prior to the date that is one year following the applicable borrowing (the "Borrowing Date"), an amount equal
to 10.0% of the aggregate outstanding principal amount of the CRG Term Loan being prepaid and (ii) if prepayment occurs one year after
the applicable Borrowing Date and on or prior to two years following the applicable Borrowing Date, an amount equal to 5.0% of the aggregate
outstanding principal amount of the CRG Term Loan being prepaid. No prepayment premium is due on any principal prepaid if prepayment
occurs two years or more after the applicable Borrowing Date.

 Certain of the Company's current and future
subsidiaries, including the Guarantors, are guaranteeing the obligations of the Company under the CRG Term Loan Agreement. As security
for their obligations under the CRG Term Loan Agreement, on the Closing Date, the Company and the Guarantors entered into a security
agreement with the Agent pursuant to which the Company and the Guarantors granted to the Agent, as collateral agent for the lenders,
a lien on substantially all of the Company's and the Guarantors' assets, including intellectual property (subject to certain
exceptions).

 The CRG Term Loan Agreement contains affirmative
and negative covenants customary for financings of this type, including limitations on the Company's and the Guarantors'
abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions above certain
thresholds, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions,
in each case, subject to certain exceptions. In addition, the CRG Term Loan Agreement contains the following financial covenants requiring
the Company and the Guarantors in the aggregate to maintain:

 liquidity in an amount which shall
 exceed the greater of: (i) $ 3.0 million and (ii) to the extent the Company has incurred certain
 permitted debt, the minimum cash balance, if any, required of the Company by the creditors
 of such permitted debt; and

 annual minimum revenue of at least:
 (i) $ 60.0 million for the twelve-month period beginning on January 1, 2024 and ending on
 December 31, 2024, (ii) $ 75.0 million for the twelve-month period beginning on January
 1, 2025 and ending on December 31, 2025, (iii) $ 85.0 million for the twelve-month period
 beginning on January 1, 2026 and ending on December 31, 2026, (iv) $ 95.0 million for the
 twelve-month period beginning on January 1, 2027 and ending on December 31, 2027, and (v)
 $ 105.0 million during each twelve-month period beginning on January 1 of a given year thereafter.

 The CRG Term Loan Agreement contains representations
and warranties of the Company and the Guarantors customary for financings of this type, and also includes events of default customary
for financings of this type, including, among other things, non-payment, inaccuracy of representations and warranties, covenant breaches,
a material adverse change, bankruptcy and insolvency, material judgments and a change of control, in certain cases subject to customary
periods to cure. The occurrence and continuance of an event of default could result in the acceleration of the obligations under the
CRG Term Loan Agreement. As of December 31, 2024, the Company was in compliance with all debt covenants.

 F- 21

 Cadence
Term Loan

 In
connection with the entry into the Applied Purchase Agreement, on August 1, 2023, SMAT, as borrower, and the Company, as guarantor,
entered into a loan agreement (the "Cadence Loan Agreement") with Cadence Bank (the "Bank") providing for, among
other things, an advancing term loan in the aggregate principal amount of $ 12.0 million (the "Cadence Term Loan"), which
was evidenced by an advancing promissory note. Pursuant to the Cadence Loan Agreement, the Bank agreed to make, at any time and from
time to time prior to February 1, 2024, one or more advances to SMAT.

 The
proceeds of the advances under the Cadence Loan Agreement were used for working capital and for purposes of financing up to one hundred
percent ( 100 %) of the Cash Closing Consideration and Installment Payments for the Applied Asset Purchase and related fees and expenses,
including any subsequent payments that were due to the Sellers after the Closing. On August 1, 2023, the Bank, at the request of SMAT,
made an advance for $ 9.75 million. The proceeds from the advance were used to fund the Cash Closing Consideration for the Applied Asset
Purchase.

 The
unpaid principal balance of outstanding advances bore interest, subject to certain conditions, at the lesser of the Maximum Rate (as
defined in the Cadence Loan Agreement) or the Base Rate, which was for any day, a rate per annum equal to the term secured overnight
financing rate (Term SOFR) (as administered by the Federal Reserve Bank of New York) for a one-month tenor in effect on such day plus
three percent ( 3.0 %). As of December 31, 2023, the interest rate on the advance under the Cadence Term Loan was 8.3 %.

 On
the Closing Date of the CRG Term Loan Agreement, the Cadence Loan Agreement was terminated and all outstanding amounts under the Cadence
Term Loan were repaid in full and all security interest and other liens granted to or held by Cadence were terminated and released. In
addition, unamortized debt issuance costs as of the termination date of $ 53,438 were included in "Interest expense" in the
Consolidated Statements of Operations.

 The
table below presents the components of the Company's outstanding debt for the periods presented:

OF LONG-TERM DEBT

 2024

 2023

 CRG Term Loan

 $
 30,500,000

 $
 -

 Paid-in-kind interest

 838,965

 -

 Back-end fee

 358,086

 -

 Cadence Term Loan

 -

 9,750,000

 Debt

 31,697,051

 9,750,000

 Less: unamortized debt issuance costs

 ( 1,007,761
)

 ( 56,520
)

 Debt, net of debt issuance costs

 30,689,290

 9,693,480

 Less: Current portion of debt

 -

 580,357

 Long-term debt, net of current portion

 $
 30,689,290

 $
 9,113,123

 F- 22

 The
table below presents the aggregate maturities of the Company's outstanding debt as of December 31, 2024:

OF MATURITIES OUTSTANDING

 Year

 Total

 2025

 $
 -

 2026

 -

 2027

 -

 2028

 -

 2029

 31,697,051

 Thereafter

 -

 Total debt

 $
 31,697,051

 In
connection with the CRG Term Loan, the Company incurred $ 1,160,740 in debt issuance costs during the year ended December 31, 2024.
Debt issuance costs are amortized to "Interest expense" in the Consolidated Statements of Operations over the life of the
debt to which they pertain. The total unamortized debt issuance costs were $ 1,007,761 and $ 56,520 as of December 31, 2024 and December 31,
2023, respectively. Debt issuance costs are included in "Long-term debt, net of current portion" in the Consolidated Balance
Sheets. Amortization expense related to debt issuance costs was $ 209,499 and $ 5,138 for the year ended December 31, 2024 and 2023,
respectively. Amortization for the year ended December 31, 2024 includes the write-off of debt issuance costs of $ 56,520 related
to the termination of Cadence Term Loan. The fair value of the Company's long-term debt approximated its carrying value as December 31, 2024.

 NOTE
9 - COMMITMENTS AND CONTINGENCIES

 License
Agreements and Royalties

 CellerateRX
Surgical

 In
August 2018, the Company entered an exclusive, world-wide sublicense agreement with CGI Cellerate RX to distribute certain hydrolyzed
collagen products, including CellerateRX Surgical, into the surgical and wound care markets. Pursuant to the Sublicense Agreement, the
Company paid royalties of 3-5% of annual collected net sales of these products.

 As
discussed further in Note 3, on August 1, 2023, the Company purchased certain assets from Applied, including the rights to manufacture
and sell certain hydrolyzed collagen products, including CellerateRX Surgical, for use in the human wound care market. In connection
with the Applied Asset Purchase, Applied assigned the License Agreement with CGI Cellerate RX to SMAT, and on October 10, 2024, the License
Agreement and Sublicense Agreement were terminated for no additional consideration.

 Under
the Sublicense Agreement, royalty expense, which was recorded in "Cost of goods sold" in the accompanying Consolidated Statements
of Operations, totaled zero and $ 991,099, respectively, for the year ended December 31, 2024 and 2023.

 BIASURGE
Advanced Surgical Solution, BIAK S Antimicrobial Wound Gel and BIAK S Antimicrobial Skin and Wound Cleanser

 In
July 2019, the Company executed a license agreement with Rochal Industries, LLC ("Rochal"), a related party, pursuant to
which the Company acquired an exclusive world-wide license to market, sell and further develop antimicrobial products for the prevention
and treatment of microbes on the human body utilizing certain Rochal patents and pending patent applications (the "BIAK S
License Agreement"). Currently, the products covered by the BIAK S License Agreement are BIASURGE Advanced Surgical Solution,
BIAK S Antimicrobial Wound Gel, BIAK S Antimicrobial Skin and Wound Cleanser. All three products are 510(k) cleared.

 Future
commitments under the terms of the BIAK S License Agreement include:

 The
 Company pays Rochal a royalty of 2 - 4 % of net sales. The minimum annual royalty due to Rochal
 will increase to a maximum amount of $ 150,000 in 2025.

 The
 Company may pay additional royalties annually based on specific net profit targets from sales
 of the licensed products, subject to a maximum of $ 1,000,000 during any calendar year.

 F- 23

 Unless
previously terminated by the parties, the BIAK S License Agreement expires with the related patents in December 2031.

 Under
this agreement, royalty expense, which is recorded in "Cost of goods sold" in the accompanying Consolidated Statements of
Operations, was $ 177,005 and $ 130,000 for the year ended December 31, 2024 and 2023, respectively. The Company's Executive
Chairman and Chief Executive Officer is a director of Rochal, and indirectly a significant shareholder of Rochal, and through the potential
exercise of warrants, a majority shareholder of Rochal. Another one of the Company's directors is also a director and significant
shareholder of Rochal.

 CuraShield
Antimicrobial Barrier Film and No Sting Skin Protectant

 In
October 2019, the Company executed a license agreement with Rochal pursuant to which the Company acquired an exclusive world-wide license
to market, sell and further develop certain antimicrobial barrier film and skin protectant products for use in the human health care
market utilizing certain Rochal patents and pending patent applications (the "ABF License Agreement"). Currently, the products
covered by the ABF License Agreement are CuraShield Antimicrobial Barrier Film and a no sting skin protectant product.

 Future
commitments under the terms of the ABF License Agreement include:

 The
 Company will pay Rochal a royalty of 2 - 4 % of net sales. The minimum annual royalty due to
 Rochal will be $ 50,000 beginning with the first full calendar year following the year in
 which first commercial sales of the products occur. The annual minimum royalty will increase
 by 10 % each subsequent calendar year up to a maximum amount of $ 75,000.

 The
 Company will pay additional royalties annually based on specific net profit targets from
 sales of the licensed products, subject to a maximum of $ 500,000 during any calendar year.

 Unless
previously terminated or extended by the parties, the ABF License Agreement will terminate upon expiration of the last U.S. patent in
October 2033. No commercial sales or royalties have been recognized under this agreement as of December 31, 2024.

 Debrider
License Agreement

 In
May 2020, the Company executed a product license agreement with Rochal, pursuant to which the Company acquired an exclusive world-wide
license to market, sell and further develop a debrider for human medical use to enhance skin condition or treat or relieve skin disorders,
excluding uses primarily for beauty, cosmetic, or toiletry purposes (the "Debrider License Agreement").

 Future
commitments under the terms of the Debrider License Agreement include:

 Upon
 FDA clearance of the licensed products, the Company will pay Rochal $ 500,000 in cash and
 an additional $ 1,000,000, which at the Company's option may be paid in any combination
 of cash and its common stock.

 The
 Company will pay Rochal a royalty of 2 - 4 % of net sales. The minimum annual royalty due to
 Rochal will be $ 100,000 beginning with the first full calendar year following the year in
 which first commercial sales of the licensed products occur and increase by 10 % each subsequent
 calendar year up to a maximum amount of $ 150,000.

 The
 Company will pay additional royalty annually based on specific net profit targets from sales
 of the licensed products, subject to a maximum of $ 1,000,000 during any calendar year.

 Unless
previously terminated or extended by the parties, the Debrider License Agreement will expire in October 2034. No commercial sales or
royalties have been recognized under this agreement as of December 31, 2024.

 F- 24

 Acquisitions

 Rochal
Asset Acquisition

 The
Company entered into an asset purchase agreement with Rochal effective July 1, 2021, pursuant to which the Company purchased certain
assets of Rochal. Pursuant to the asset purchase agreement, for the three-year period after the effective date, Rochal was entitled to
receive consideration for any new product relating to the business that is directly and primarily based on an invention conceived and
reduced to practice by a member or members of Rochal's science team. For the three-year period after the effective date, Rochal
was also entitled to receive an amount in cash equal to twenty-five percent of the proceeds received for any Grant (as defined in the
asset purchase agreement) by either the Company or Rochal. In addition, the Company agreed to use commercially reasonable efforts to
perform Minimum Development Efforts (as defined in the asset purchase agreement) with respect to certain products under development,
which if obtained, will entitle the Company to intellectual property rights from Rochal in respect of such products.

 Precision
Healing Merger Agreement

 In
April 2022, the Company closed a merger transaction with Precision Healing pursuant to which Precision Healing became a wholly owned
subsidiary of the Company. Pursuant to the terms of the merger agreement, holders of Precision Healing common stock and preferred stock,
other than the Company, were entitled to receive closing consideration, consisting of $ 125,966 in cash consideration, which was paid
to stockholders who were not accredited investors, 165,738 shares of the Company's common stock, which was paid only to accredited
investors, and the payment in cash of approximately $ 0.6 million of transaction expenses of Precision Healing. The Company recorded the
issuance of the 165,738 shares to accredited investors and cash payments to nonaccredited investors based on the closing price per share
of the Company's common stock on April 4, 2022, which was $ 30.75.

 Upon
the closing of the merger, the Precision Healing outstanding options previously granted under the Precision Healing Plan converted, pursuant
to their terms, into options to acquire an aggregate of 144,191 shares of Company common stock with a weighted average exercise price
of $ 10.71 per share. These options expire between August 2030 and April 2031. In addition, outstanding and unexercised Precision Healing
warrants converted into rights to receive warrants to purchase (i) 4,424 shares of the Company's common stock with an initial exercise
price of $ 7.32 per share and an expiration date of April 22, 2031, and (ii) 12,301 shares of the Company's common stock with
an initial exercise price of $ 12.05 per share and an expiration date of August 10, 2030. Concurrent with the assumption of the Precision
Healing Plan, the Company terminated the ability to offer future awards under the Precision Healing Plan. As of December 31, 2024, all
warrants to purchase shares of the Company's common stock pursuant to the transaction with Precision Healing were exercised and
there were 31,013 share options remaining to be exercised.

to the merger agreement, upon the achievement of certain performance thresholds, the securityholders of Precision Healing, including
the holders of options and warrants to purchase Precision Healing common stock and certain persons promised options to purchase Precision
Healing common stock, was also entitled to receive payments of up to $ 10.0 million, which was accounted for as contingent consideration
pursuant to ASC 805. The earnout consideration was payable in cash or, at the Company's election, was payable to accredited investors
in shares of Company common stock at a price per share equal to the greater of (i) $ 27.13 or (ii) the average closing price of Company
common stock for the 20 trading days prior to the date such earnout consideration was due and payable. Pursuant to the merger agreement,
a minimum percentage of the earnout consideration may be required to be issued to accredited investors in shares of Company common stock
for tax purposes. The amount and composition of the portion of earnout consideration payable was subject to adjustment and offsets as
set forth in the merger agreement. The Company reviewed the performance thresholds necessary to trigger an earnout payment as of December
31, 2024 and deemed the performance thresholds to be unachievable. Therefore, the remaining fair value of the earnout consideration was
reduced to zero.

 Scendia
Purchase Agreement

 In
July 2022, the Company closed the Scendia acquisition pursuant to which Scendia became a wholly owned subsidiary of the Company. Pursuant
to the purchase agreement, the aggregate consideration for the acquisition at closing was approximately $ 7.6 million, subject to customary
post-closing adjustments. The consideration consisted of (i) approximately $ 1.6 million of cash, subject to certain adjustments, and
(ii) 291,686 shares of common stock of the Company. Pursuant to the purchase agreement, at closing, the Company withheld 94,798 Indemnity
Holdback Shares, which such Indemnity Holdback Shares were withheld to the extent provided in the purchase agreement to satisfy Ryan
Phillips' ("Phillips") indemnification obligations and subsequently issued and released to Phillips in July 2023.

 In
addition to the cash consideration and the stock consideration, the purchase agreement provides that Phillips was entitled to receive
two potential earnout payments, payable on an annual basis, not to exceed $ 10.0 million in the aggregate, which was accounted for as
contingent consideration pursuant to ASC 805. The earnout consideration was payable to Phillips in cash or, at the Company's election,
in up to 486,145 shares of the Company's common stock upon the achievement of certain performance thresholds relating to net revenue
attributable to sales of Scendia products during the two-year period following the closing. The Company made the first earnout payment
of approximately $ 693,000 in cash in August 2023 and the second and final earnout payment of approximately $ 1.1 million in cash in October
2024.

 F- 25

 Applied
Asset Purchase

 On
August 1, 2023, the Company closed the Applied Asset Purchase. The Applied Purchased Assets were purchased for an initial aggregate
purchase price of $ 15.25 million, consisting of (i) the Cash Closing Consideration, (ii) the Stock Closing Consideration and (iii) the
Installment Payments.

 In
addition to the Cash Closing Consideration, Stock Closing Consideration and Installment Payments, the Applied Purchase Agreement provides
that the Sellers are entitled to receive the Applied Earnout, which is payable to the Sellers in cash, upon the achievement of certain
performance thresholds relating to SMAT's collections from net sales of a collagen-based product currently under development. Upon
expiration of the seventh anniversary of the Closing, to the extent the Sellers have not earned the entirety of the Applied Earnout,
SMAT shall pay the Sellers the True-Up Payment. The Applied Earnout, minus the True-Up Payment and any Applied Earnout payments already
made by SMAT, may be earned at any point in the future, including after the True-Up Payment is made. The first Installment Payment of
$ 625,000 was made in August 2024.

 In
connection with the Applied Asset Purchase and pursuant to the Applied Purchase Agreement, effective August 1, 2023, the Company entered
into the Petito Services Agreement with the Owner, pursuant to which the Owner, as an independent contractor, agreed to provide the Petito
Services. As consideration for the Petito Services, the Owner is entitled to receive: (i) a base salary of $12,000 per month during the
term of the Petito Services Agreement, (ii) a royalty payment equal to three percent (3%) of the actual collections from net sales of
certain products the Owner develops or codevelops that reach commercialization, (iii) a royalty payment equal to five percent (5%) for
the first $50.0 million in aggregate collections from net sales of certain future products and a royalty payment of two and one-half
percent (2.5%) on aggregate collections from net sales of certain future products on any amounts exceeding $50.0 million but up to $100.0
million, (iv) $500,000 in cash in the event that 510(k) clearance is issued for any future product accepted by the Company and (v) $1.0
million in cash in the event that a U.S. patent is issued for a certain product; provided that with respect to the incentive payments
described in (iv) and (v) of the foregoing, the Owner shall not earn more than $2.5 million.

 The
Petito Services Agreement has an initial term of three years and is subject to automatic successive one-month renewals unless earlier
terminated in accordance with its terms. The Petito Services Agreement may be terminated upon the Owner's death or disability or
by the Company or the Owner "For Cause" (as defined in the Petito Services Agreement); provided, however, that the base salary
described in (i) of the foregoing paragraph shall survive termination through the three-year initial term and the royalty payments and
incentive payments described in (ii)-(v) of the foregoing paragraph shall survive termination of the Petito Services Agreement.

 Other
Commitments

 On
December 20, 2023, the Company 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, the Company 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 related to this arrangement as of December 31, 2024.

 NOTE
10 – SHAREHOLDERS' EQUITY

 Common
Stock

 At
the Company's Annual Meeting of Shareholders held in July 2020, the Company approved the Restated 2014 Omnibus Long Term Incentive
Plan (the "2014 LTIP") in which the Company's directors, officers, employees and consultants are eligible to participate.
The 2014 LTIP terminated on September 3, 2024, and no future awards may be granted pursuant to the 2014 LTIP. Previously granted awards
under the 2014 LTIP will remain outstanding until they expire by their terms or under the terms of the 2014 LTIP.

 F- 26

 On
June 12, 2024, the Company's shareholders approved the 2024 Omnibus Long-Term Incentive Plan (the "2024 LTIP"),
which went into effect upon shareholder approval. The maximum number of shares of the Company's common stock that may be delivered
pursuant to awards granted under the 2024 LTIP is 1,000,000, subject to increase by any awards under the 2014 LTIP (i) that were outstanding
on or after June 12, 2024, and that, on or after such date, are forfeited, expire or are canceled, and (ii) any shares subject to awards
relating to common stock under the 2014 LTIP that are settled in cash on or after June 12, 2024 (the "Prior LTIP Awards").
The 2024 LTIP also provides that, to the extent an award under the 2024 LTIP or a Prior LTIP Award is forfeited, expires or is canceled,
in whole or in part, the shares subject to such forfeited, expired or canceled award may again be awarded under the 2024 LTIP. As of
December 31, 2024, a total of 742,405 shares had been issued under the 2014 LTIP, 2,543 shares had been issued under the 2024 LTIP
and 1,000,137 were available for issuance under the 2024 LTIP.

 On
August 1, 2023, the Company closed the Applied Asset Purchase. Included in the purchase price was 73,809 shares of the Company's
common stock. See Note 3 for more information regarding the acquisition of Applied.

 In
February 2023, the Company entered into a Controlled Equity Offering SM Sales Agreement (the "Sales Agreement")
with Cantor Fitzgerald & Co., as sales agent ("Cantor"), pursuant to which the Company could offer and sell from time
to time, to or through Cantor, shares of the Company's common stock having an aggregate offering price of up to $ 75,000,000.

 Sales
of the shares were made in sales deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under
the Securities Act of 1933, as amended. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement,
Cantor agreed to use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal
law, rules and regulations and the rules of The Nasdaq Capital Market to sell the shares from time to time based upon the Company's
instructions, including any price, time period or size limits specified by the Company. The Company had no obligation to sell any of
the shares under the Sales Agreement and could suspend or terminate the offering of its common stock pursuant to the Sales Agreement
upon notice to Cantor and subject to other conditions. Cantor's obligations to sell the shares under the Sales Agreement were subject
to satisfaction of certain conditions, including customary closing conditions. Pursuant to the Sales Agreement, the Company paid Cantor
a commission of 3.0% of the aggregate gross proceeds from each sale of the shares.

 In
2023, the Company sold an aggregate of 26,143 shares of common stock for gross proceeds of approximately $ 1.1 million and net proceeds
of approximately $ 0.9 million pursuant to the Sales Agreement. The Company paused the offering at the end of the first quarter of 2023
and did not reactivate it during the remainder of 2023. The Form S-3 registration statement for this offering expired at the beginning
of 2024.

 In
April 2022, the Company closed a merger transaction with Precision Healing pursuant to which Precision Healing became a wholly owned
subsidiary of the Company. Pursuant to the terms of the merger agreement, holders of Precision Healing common stock and preferred stock,
other than the Company, were entitled to receive closing consideration, consisting of $ 125,966 in cash consideration, which was paid
to stockholders who were not accredited investors, 165,738 shares of the Company's common stock, which was paid only to accredited
investors, and the payment in cash of approximately $ 0.6 million of transaction expenses of Precision Healing. The Company recorded the
issuance of the 165,738 shares to accredited investors and cash payments to nonaccredited investors based on the closing price per share
of the Company's common stock on April 4, 2022, which was $ 30.75.

 Upon
the closing of the merger, the Precision Healing outstanding options previously granted under the Precision Healing Plan converted, pursuant
to their terms, into options to acquire an aggregate of 144,191 shares of Company common stock with a weighted average exercise price
of $ 10.71 per share. These options expire between August 2030 and April 2031. In addition, outstanding and unexercised Precision Healing
warrants converted into rights to receive warrants to purchase (i) 4,424 shares of the Company's common stock with an initial exercise
price of $ 7.32 per share and an expiration date of April 22, 2031, and (ii) 12,301 shares of the Company's common stock with
an initial exercise price of $ 12.05 per share and an expiration date of August 10, 2030. Concurrent with the assumption of the Precision
Healing Plan, the Company terminated the ability to offer future awards under the Precision Healing Plan.

to the merger agreement, upon the achievement of certain performance thresholds, the securityholders of Precision Healing, including
the holders of options and warrants to purchase Precision Healing common stock and certain persons promised options to purchase Precision
Healing common stock, were entitled to receive payments of up to $ 10.0 million, which was accounted for as contingent consideration pursuant
to ASC 805. The earnout consideration was payable in cash or, at the Company's election, payable to accredited investors in shares
of Company common stock at a price per share equal to the greater of (i) $ 27.13 or (ii) the average closing price of Company common stock
for the 20 trading days prior to the date such earnout consideration is due and payable. The Company reviewed the performance thresholds
necessary to trigger an earnout payment as of December 31, 2024 and deemed the performance thresholds to be unachievable. Therefore,
no earnout consideration is expected to be paid to the securityholders of Precision Healing.

 F- 27

 Restricted
Stock Awards

 During
the year ended December 31, 2024, the Company issued restricted stock awards under the 2014 LTIP which are subject to certain vesting
provisions and other terms and conditions set forth in each recipient's respective restricted stock agreement. The Company issued
 161,908 shares, net of forfeitures, under the 2014 LTIP and 2,543 shares under the 2024 LTIP, of restricted common stock to employees,
directors, and certain advisors of the Company during the year ended December 31, 2024. The fair value of these awards was $ 5,747,656
based on the closing price of the Company's common stock on the respective grant dates, which will be recognized as compensation
expense on a straight-line basis over the vesting period of the awards.

 Share-based
compensation expense of $ 4,436,048 and $ 3,442,722 was recognized in "Operating expenses" in the accompanying Consolidated
Statements of Operations during the year ended December 31, 2024 and 2023, respectively.

 At
December 31, 2024, there was $ 4,189,272 of total unrecognized share-based compensation expense related to unvested share-based equity
awards. Unrecognized share-based compensation expense is expected to be recognized over a weighted-average period of 1.5 years.

 Below
is a summary of restricted stock activity for the year ended December 31, 2024:

 SUMMARY
OF RESTRICTED STOCK ACTIVITY

 Shares

 Grant Date Fair Value

 Nonvested at beginning of period

 144,211

 $
 34.07

 Granted

 192,783

 35.00

 Vested

 ( 105,875
)

 34.19

 Forfeited

 ( 28,332
)

 35.31

 Nonvested at December 31, 2024

 202,787

 $
 34.72

 Stock
Options

 A
summary of the status of outstanding stock options at December 31, 2024 and changes during the year then ended is presented below:

 SCHEDULE OF STOCK OPTION ACTIVITY

 Options

 Exercise
 Price

 Remaining
 Contract Life

 Aggregate
 Intrinsic
 Value

 Outstanding at beginning of period

 93,892

 $
 10.22

 Granted or assumed

 -

 -

 Exercised

 ( 62,879
)

 10.05

 Forfeited

 -

 -

 Expired

 -

 -

 Outstanding at December 31, 2024

 31,013

 $
 10.57

 5.8

 $
 701,975.3

 Exercisable at December 31, 2024

 31,013

 $
 10.57

 5.8

 $
 701,975.3

 F- 28

 Warrants

 A
summary of the status of outstanding warrants to purchase common stock at December 31, 2024 and changes during the year then ended
is presented below:

OF WARRANTS TO PURCHASE COMMON STOCK

 Warrants

 Exercise
 Price

 Remaining
 Contract Life

 Outstanding at beginning of period

 16,725

 $
 10.80

 Granted or assumed

 -

 -

 Exercised

 ( 16,725
)

 -

 Forfeited

 -

 -

 Expired

 -

 -

 Outstanding at December 31, 2024

 -

 $
 -

 -

 Exercisable at December 31, 2024

 -

 $
 -

 -

 NOTE
11 – CUSTOMERS AND SUPPLIERS

 The
Company had no customers in 2024 that accounted for at least 10 % of the Company's annual sales or whose accounts receivable balance
exceeded 10 % of the year-end balance. The Company had no customers in 2023 that accounted for at least 10 % of Company's annual
sales and whose accounts receivable exceeded 10 % of the year-end balance.

 The
Company's principal revenue producing products are purchased from one manufacturer. If this supplier became unable to provide finished
goods inventory in a timely manner, the Company's business, operating results, and financial condition could be materially adversely
affected.

 NOTE
12 – INCOME TAXES

 The
Company accounts for income taxes in accordance with ASC Topic No. 740, Income Taxes. This standard requires the Company to provide a
net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book
and tax accounting and any available operating loss or tax credit carry forwards.

 After
applying the provisions of Section 382 of the Internal Revenue Code, the unexpired net operating loss ("NOL") carryforward
at December 31, 2024 was approximately $ 57.5 million, of which, approximately $ 26.5 million, generated in 2017 and prior, will expire
between 2024 and 2037. Under the Tax Cuts and Jobs Act, the NOL generated from 2018 through 2024, of approximately $ 30.9 million, will
have an indefinite carryforward period but can generally only be used to offset 80% of taxable income in any particular year. The Company
may be subject to certain limitations in its annual utilization of NOL carry forwards to off-set future taxable income pursuant to Section
382 of the Internal Revenue Code, which could result in NOLs expiring unused.

 F- 29

 The
components of the deferred income tax assets and liabilities consisted of the following:

OF DEFERRED TAX ASSETS

 2024

 2023

 As of December 31,

 2024

 2023

 Deferred tax assets

 Net operating loss carry forwards

 $
 12,907,965

 $
 12,467,570

 Research and development costs

 3,006,029

 2,119,193

 Stock compensation expense

 789,373

 711,598

 Accrued expenses

 7,330

 528,148

 Lease liability

 389,882

 512,668

 Contingent liability

 221,065

 221,028

 Acquisition liability

 112,722

 176,629

 Bad debt and other reserves

 287,900

 129,924

 Inventory reserves

 130,605

 109,176

 Other temporary differences

 1,049,365

 203,340

 Total deferred tax assets

 18,902,236

 17,179,274

 Deferred tax liabilities

 ( 5,683,259
)

 ( 6,180,688
)

 Right of Use assets

 ( 353,763
)

 ( 487,402
)

 Accrued expenses

 -

 ( 424,423
)

 Contingent liability

 ( 38,308
)

 ( 130,802
)

 Other temporary differences

 ( 294,608
)

 ( 166,712
)

 Valuation allowance

 ( 12,532,298
)

 ( 9,789,247
)

 Net deferred tax asset

 $
 -

 $
 -

 A
 100 % valuation allowance has been provided for all deferred tax assets, as the ability of the Company to generate sufficient taxable
income in the future is uncertain.

 F- 30

 Reconciliations
of the expected federal income tax expense (benefit) based on the statutory income tax rate of 21% to the actual benefit for the years ended December 31,
2024 and 2023 are listed below.

OF INCOME TAX EXPENSE (BENEFIT)

 2024

 2023

 2024

 2023

 Expected federal income tax benefit

 $
 ( 2,019,060
)

 $
 ( 903,220
)

 State and local taxes, net of federal benefit

 ( 338,138
)

 ( 226,714
)

 Fair value adjustments

 ( 497,373
)

 ( 819,270
)

 Share-based compensation

 ( 237,838
)

 ( 557,168
)

 Other permanent differences

 199,857

 118,765

 NOL carryover adjustments

 97,806

 ( 5,148,128
)

 Intangibles

 -

 ( 720,407
)

 Other true ups

 90,343

 ( 230,474
)

 Changes in tax rates

 9,732

 673,449

 Change in valuation allowance

 2,743,051

 7,813,167

 Income tax expense

 $
 48,380

 $
 -

 All
tax years starting with 2021 are open for examination. The Company's 2022 federal tax return was under audit as of March 24, 2025.

 NOTE
13 – RELATED PARTIES

 CellerateRX
Sublicense Agreement

 The
Company had an exclusive, world-wide sublicense to distribute certain hydrolyzed collagen products, including CellerateRX Surgical into
the surgical and wound care markets from an affiliate of The Catalyst Group, Inc. ("Catalyst"), CGI Cellerate RX, which licensed
the rights to these products from Applied.

 As
discussed further in Note 3, on August 1, 2023, the Company purchased certain assets from Applied, including the underlying intellectual
property of, as well as the rights to manufacture and sell certain hydrolyzed collagen products, including CellerateRX Surgical. In connection
with the Applied Asset Purchase, Applied assigned the License Agreement with CGI Cellerate RX to SMAT, and on October 10, 2024, the License
Agreement and Sublicense Agreement were terminated for no additional consideration. Ronald T. Nixon, the Company's Chief Executive
Officer and Executive Chairman, is the founder and managing partner of Catalyst.

 Product
License Agreements

 In
July 2019, the Company executed a license agreement with Rochal, a related party, whereby the Company acquired an exclusive world-wide
license to market, sell and further develop antimicrobial products for the prevention and treatment of microbes on the human body utilizing
certain Rochal patents and pending patent applications. Currently, the products covered by the BIAK S License Agreement are BIASURGE
Advanced Surgical Solution, BIAK S Antimicrobial Wound Gel and BIAK S Antimicrobial Skin and Wound Cleanser. Each of these
products are 510(k) cleared. Mr. Nixon is a director of Rochal, and indirectly a significant shareholder of Rochal, and through the potential
exercise of warrants, a majority shareholder of Rochal. Another one of the Company's directors is also a director and significant
shareholder of Rochal.

 In
October 2019, the Company executed the ABF License Agreement with Rochal whereby the Company acquired an exclusive world-wide license
to market, sell and further develop certain antimicrobial barrier film and skin protectant products for use in the human health care
market utilizing certain Rochal patents and pending patent applications. Currently, the products covered by the ABF License Agreement
are CuraShield Antimicrobial Barrier Film and a no sting skin protectant product.

 F- 31

 In
May 2020, the Company executed a product license agreement with Rochal, whereby the Company acquired an exclusive world-wide license
to market, sell and further develop a debrider for human medical use to enhance skin condition or treat or relieve skin disorders, excluding
uses primarily for beauty, cosmetic, or toiletry purposes.

 See
Note 9 for more information on these product license agreements.

 Consulting
Agreement

 Concurrent
with the Rochal asset purchase, in July 2021, the Company entered into a consulting agreement with Ann Beal Salamone pursuant to which
Ms. Salamone agreed to provide the Company with consulting services with respect to, among other things, writing new patents, conducting
patent intelligence, and participating in certain grant and contract reporting. In consideration for the consulting services to be provided
to the Company, Ms. Salamone is entitled to receive an annual consulting fee of $ 177,697, with payments to be paid once per month. The
consulting agreement had an initial term of three years, unless earlier terminated by the Company, and was subject to renewal. Effective
July 13, 2024, the consulting agreement with Ms. Salamone was amended to provide that the initial term shall be automatically renewed
for successive one-year terms for up to three successive years unless earlier terminated by either party without cause at any time, provided
that the terminating party provides 90 days advance written notice of termination. Ms. Salamone is a director of the Company and is a
significant shareholder and the current Chair of the board of directors of Rochal.

 Catalyst
Transaction Advisory Services Agreement

 In
March 2023, the Company entered into a Transaction Advisory Services Agreement (the "Catalyst Services Agreement") effective
March 1, 2023 with Catalyst, a related party. Pursuant to the Catalyst Services Agreement, Catalyst, by and through its directors, officers,
employees and affiliates that are not simultaneously serving as directors, officers or employees of the Company (collectively, the "Covered
Persons"), agreed to perform certain transaction advisory, business and organizational strategy, finance, marketing, operational
and strategic planning, relationship access and corporate development services for the Company in connection with any merger, acquisition,
recapitalization, divestiture, financing, refinancing, or other similar transaction in which the Company may be, or may consider becoming,
involved, and any such additional services as mutually agreed upon in writing by and between Catalyst and the Company (the "Catalyst
Services").

to the Catalyst Services Agreement, the Company agreed to reimburse Catalyst for (i) compensation actually paid by Catalyst to any of
the Covered Persons at a rate no more than a rate consistent with industry practice for the performance of services similar to the Catalyst
Services, as documented in reasonably sufficient detail, and (ii) all reasonable out-of-pocket costs and expenses payable to unaffiliated
third parties, as documented in customary expense reports, as each of (i) and (ii) is incurred in connection with the Catalyst Services
rendered under the Catalyst Services Agreement, with all reimbursements being contingent upon the prior approval of the Audit Committee
of the Company's Board of Directors. The Company incurred costs pursuant to the Catalyst Services Agreement of $ 288,594 and $ 174,486
in the year ended December 31, 2024 and 2023, respectively, and is recorded in "Selling, general and administrative"
in the accompanying Consolidated Statements of Operations.

 NOTE
14 – SEGMENT REPORTING

 As
discussed in Note 1, the Company historically managed its business as one operating and reportable segment. During the second quarter
of 2024, the Company changed its reportable segments to reflect a change in the manner in which the business is managed. Based on the
growing importance of the value-based wound care program to the Company's future outlook and how the Company's chief operating
decision maker ("CODM"), the Chief Executive Officer, reviews operating results and makes decisions about resource allocation,
the Company has two reportable segments: Sanara Surgical and THP.

 Segment
Adjusted EBITDA is the primary profitability measure used by the CODM for purposes of assessing financial performance and resource
allocation. The Company defines Segment Adjusted EBITDA for the reportable segments as net income (loss) excluding interest
expense/income, provision/benefit for income taxes, depreciation and amortization, non-cash share-based compensation expense, change
in fair value of earnout liabilities, share of losses from equity method investments, executive separation costs, legal and
diligence expenses related to acquisitions, and gains/losses on disposal of property and equipment, as each are applicable to the
periods presented. The Company has historically presented this profitability measure as Segment EBITDA and, starting with the fourth
quarter ended December 31, 2024, is presenting it as Segment Adjusted EBITDA. The definition and methodology for calculating this
measure has remained unchanged. Segment Adjusted EBITDA, as it relates to the Company's reportable segments, is presented in
conformity with ASC 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities
and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. Segment Adjusted EBITDA may not be comparable to
similarly titled measures reported by other companies. The CODM also reviews budget-to-actual variances for expenses on a monthly
basis when making decisions about allocating resources to the segments. The Company has not included any disclosure regarding total
segment assets, as no segment level asset information is regularly provided to the CODM.

 F- 32

 Sanara
Surgical

 The
Sanara Surgical segment primarily markets and sells soft tissue repair and bone fusion products for use in the operating room or other
sterile environments. Sanara Surgical's soft tissue repair products include, among other products, the Company's lead product,
CellerateRX Surgical, and BIASURGE Advanced Surgical Solution, which is a sterile no-rinse, advanced surgical solution used for wound
irrigation. Sanara Surgical's bone fusion products include, among other products, BiFORM, which is an osteoconductive, bioactive,
porous implant that allows for bony ingrowth across the graft site, and ALLOCYTE Plus, which is a human allograft cellular bone matrix
containing bone-derived progenitor cells and conformable bone fibers.

 Sanara
Surgical also includes an in-house research and development team (Rochal Technologies) with an extensive pipeline of innovative products
under development.

 Tissue
Health Plus

 The
THP segment is focused on value-based wound care services. Through THP, the Company plans to offer a first of its kind value-based wound
care program to payers and risk-bearing entities such as accountable care organizations and value-based primary care companies, with
Medicare Advantage payers as the initial target market for this program.

 THP's
programs are expected to enable payers to divest wound care spend risk, reduce wound related hospitalizations and improve patient quality
of life. THP plans to coordinate delivery of community and home-based wound care for its managed patients. Community based care spans
a variety of settings including physician offices, skilled nursing facilities, assisted living facilities and senior living facilities.
THP programs are intended to integrate science and evidence-based medicine protocols to standardize wound prevention and treatment.

 Currently,
there are no allocated costs included in the THP segment. All corporate and overhead expenses are included in the Sanara Surgical segment,
as substantially all of those costs relate to supporting the operations and activities of the Sanara Surgical segment.

 As
a result of the change in reportable segments, certain prior period amounts have been recast to conform to the current period presentation.
Throughout this Annual Report on Form 10-K, unless otherwise indicated, amounts and activity reflect reclassifications related to the
Company's change in reportable segments. The change in reportable segments had no impact on the Company's previously reported
Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Cash Flows or Consolidated Statements
of Shareholders' Equity.

 F- 33

 The
following table reflects results of operations including significant segment expenses that are regularly provided to the CODM for
the Company's reportable segments and Segment Adjusted EBITDA for the periods indicated below:

OF OPERATIONS, ASSETS AND CAPITAL EXPENDITURES FOR OUR BUSINESS SEGMENTS

 THP

 Total

 THP

 Total

 Year Ended

 2024

 2023

 THP

 Total

 THP

 Total

 Net revenue

 $

 $
 -

 $

 $
 64,987,112

 $
 2,730

 $

 Gross profit (loss)

 78,532,524

 -

 78,532,524

 57,143,391

 ( 6,235
)

 57,137,156

 Selling, general and administrative

 71,673,642

 4,886,221

 76,559,863

 54,826,852

 2,167,901

 56,994,753

 Research and development

 2,828,663

 2,874,699

 5,703,362

 902,782

 3,229,643

 4,132,425

 2,785,829

 2,137,395

 2,046,859

 1,628,167

 ( 14,451
)

 ( 1,924,000
)

)

 ( 1,298,336
)

 ( 2,151,559
)

 ( 3,449,895
)

 Other expense

 3,196,424

 -

 3,196,424

 224,749

 -

 224,749

 Net income (loss)

 $
 ( 1,937,583
)

 $
 ( 7,974,315
)

 $
)

 $
 440,485

 $
 ( 4,880,387
)

 $
)

 Segment Adjusted EBITDA

 $
 9,148,722

 $
 ( 6,457,415
)

 $
 2,691,307

 $
 5,289,634

 $
 ( 5,162,387
)

 $
 127,247

 F- 34

 The
following table provides a reconciliation of net income (loss) to Segment Adjusted EBITDA for the Company's reportable segments
for the periods indicated below:

OF RECONCILIATION OF NET INCOME (LOSS) TO SEGMENT EBITDA FOR REPORTABLE SEGMENTS

 THP

 Total

 THP

 Total

 Year Ended

 2024

 2023

 THP

 Total

 THP

 Total

 Net Income (Loss)

 $
 ( 1,937,583
)

 $
 ( 7,974,315
)

 $
)

 $
 440,485

 $
 ( 4,880,387
)

 $
)

 Adjustments:

 Interest expense

 3,128,395

 -

 3,128,395

 475,783

 -

 475,783

 Interest income

 ( 21,978
)

 -

 ( 21,978
)

 -

 -

 -

 Depreciation and amortization (1)

 2,785,829

 2,137,395

 2,046,859

 1,628,167

 Noncash share-based compensation

 3,969,008

 138,245

 4,107,253

 3,201,330

 241,392

 3,442,722

 ( 14,451
)

 ( 1,924,000
)

)

 ( 1,298,336
)

 ( 2,151,559
)

 ( 3,449,895
)

 Share of losses from equity method investments

 -

 -

 -

 -

 Executive separation costs (2)

 964,466

 -

 964,466

 -

 -

 -

 Acquisition costs (3)

 185,029

 1,165,260

 1,350,289

 423,513

 -

 423,513

 Segment Adjusted EBITDA

 $
 9,148,722

 $
 ( 6,457,415
)

 $
 2,691,307

 $
 5,289,634

 $
 ( 5,162,387
)

 $
 127,247

 (1)
 Includes
 a $ 506,836 non-cash charge during the fourth quarter of 2024 to write-off the remaining net
 book value of certain THP internal use software assets.

 (2)
 Includes
 $ 328,795 of share-based compensation related to executive separation costs for the twelve
 months ended December 31, 2024.

 (3)
 Acquisition
 costs include legal, tax and accounting services related to prospective acquisitions.

 NOTE
15 – SUBSEQUENT EVENTS

 Exclusive
License and Distribution Agreement With, and Minority Investment in, Biomimetic Innovations Ltd

 Licensing
and Distribution Agreement

 On
January 16, 2025 (the "Execution Date"), the Company entered into a Licensing and Distribution Agreement (the "License
Agreement"), by and between the Company and Biomimetic Innovation Limited, a privately-held medical device company headquartered
in Shannon, Co. Clare Ireland ("BMI"), pursuant to which the Company acquired the exclusive U.S. marketing, sales and distribution
rights to OsStic Synthetic Injectable Structural Bio-Adhesive Bone Void Filler ("OsStic"), as well as an adjunctive
internal fixation technology featuring novel delivery to promote targeted application of OsStic ("ARC" and together with
OsStic, the "Products"), for use in the treatment of a wound or injury caused by a traumatic incident.

to the License Agreement, the Company was appointed by BMI as the exclusive distributor to promote, market, offer to sell, transfer,
distribute and sell the Products for trauma indications inside the United States and its territories for an initial five-year term, which
term may be automatically renewed for successive two-year periods at the Company's discretion, provided that the Company is in
compliance with its obligations thereunder (the "Term"). From the Execution Date until October 13, 2025, the Company has
an exclusive option to negotiate exclusive distribution rights for the Products in additional fields and/or additional territories on
substantially the same terms as those set forth in the License Agreement.

 F- 35

 The
License Agreement requires that the Company pay BMI quarterly royalties (the "Quarterly Royalties") based on a percentage
of the Net Sales Value (as defined in the License Agreement) of the Products during the Term, with the applicable percentage of the Net
Sales Value for OsStic being in the mid-single digit range. Pursuant to the License Agreement, the Company and BMI agreed to negotiate
the applicable percentage of the Net Sales Value for ARC at a future date. The License Agreement also requires that the Company pay BMI
minimum royalty payments being in the low to mid six figure range for the first, second and third years, respectively, following the
receipt of first regulatory approval for the marketing and sale of a Product.

 Subscription
and Shareholders' Agreement

 In
connection with the License Agreement, on the Execution Date, the Company entered into a Share Subscription and Shareholders' Agreement
(the "Subscription Agreement"), by and among the Company, The Russell Revocable Living Trust, BMI and the existing shareholders
of BMI, pursuant to which the Company agreed to contribute up to approximately 8.0 million to BMI through a series of capital contributions
in exchange for an aggregate of 16,460 ordinary shares of BMI, constituting approximately 12.5% of the outstanding equity of BMI as of
the Execution Date. The Company made an initial cash investment totaling approximately 3.0 million on the Execution Date, and the
Company's previously announced convertible loan to BMI was converted into 1.0 million of equity in BMI. Pursuant to the Subscription
Agreement, the remaining 4.0 million contribution is due upon the achievement of certain development, clinical and regulatory milestones
(the "Milestones").

to the Subscription Agreement, so long as the Company holds a five percent ownership interest or greater in BMI, the Company is entitled
to have one person appointed to BMI's board of directors. The Company's initial investment of approximately 4.0 million
caused the Company to exceed the five percent ownership interest threshold in BMI, and as a result the Company's Chief Corporate
Development & Strategy Officer, Tyler Palmer, has been nominated and appointed to BMI's board of directors. In addition, the
Company has the right to send one non-voting observer to attend meetings of the BMI board of directors, regardless of the Company's
ownership interest level. The Company's capital contributions must be used to fund the development and commercialization of the
Products, and the Company has certain veto and consent rights to further protect the Company's investment in BMI and to support
its ability to successfully market and sell the Products.

 CRG Term Loan Amendment

 On [ March
19, 2025 ], the Company and the Guarantors entered into the First Amendment to Term Loan Agreement with the Agent and the lenders
party thereto from time to time, which amended the CRG Term Loan Agreement to, among other things, (i) entitle the Company to two additional
borrowings following the Second Borrowing, which borrowings must occur on or prior to December 31, 2025, if at all, and (ii) remove the
requirement that any borrowing be in whole multiples of $5.0 million.

 F- 36

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 ITEM
9A. CONTROLS AND PROCEDURES

 Evaluation
of Disclosure Controls and Procedures

 We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports
that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded,
processed, summarized and reported within the time periods specified by the SEC's rules and forms, and that information is accumulated
and communicated to our management, including our principal executive and principal financial officers (whom we refer to in this periodic
report as our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated,
with the participation of our Certifying Officers, the effectiveness of our disclosure controls and procedures as of December 31, 2024,
pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December
31, 2024, our disclosure controls and procedures were effective.

 Management's
Report on Internal Control over Financial Reporting

 Management
is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in
accordance with generally accepted accounting principles.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls
may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
over time.

 Management
believes that our policies and procedures provide reasonable assurance that our operations are conducted with a high standard of business
ethics. In management's opinion, our financial statements present fairly, in all material respects, our financial position, results
of operations, and cash flows. Management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives. Management applies its judgment in evaluating the cost-benefit relationship
of possible controls and procedures.

 The
Company's management, specifically its Certifying Officers, has assessed the effectiveness of the Company's internal control
over financial reporting as of December 31, 2024 using the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control – Integrated Framework (2013) and SEC guidance on conducting such assessments. Based
on this assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31,
2024.

 Changes
in Internal Control over Financial Reporting

 There
were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 No
Attestation Report of Registered Public Accounting Firm

 This
Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant
to the rules of the SEC that permit us to provide only management's report in this Annual Report on Form 10-K.

 ITEM
9B. OTHER INFORMATION

 None

 On
March 19, 2025, the Company and the Guarantors entered into the CRG Amendment, which amended the CRG Term Loan Agreement to, among other
things, (i) entitle the Company to two additional borrowings following the Second Borrowing, which borrowings must occur on or prior
to December 31, 2025, if at all, and (ii) remove the requirement that any borrowing be in whole multiples of $5.0 million.

 Except as expressly amended pursuant to
the CRG Amendment, the terms and conditions of the CRG Term Loan Agreement remain in full force and effect.

 The foregoing description of the CRG Amendment
is qualified in its entirety by reference to the full text of the CRG Amendment, which is filed as Exhibit 10.20 to this Annual Report
on Form 10-K and is incorporated by reference herein.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 PART
III

 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 The
information required in response to this Item 10 is incorporated herein by reference to our Definitive Proxy Statement on Schedule 14A
to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

 ITEM
11. EXECUTIVE COMPENSATION

 The
information required in response to this Item 11 is incorporated herein by reference to our Definitive Proxy Statement on Schedule 14A
to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The
information required in response to this Item 12 is incorporated herein by reference to our Definitive Proxy Statement on Schedule 14A
to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 The
information required in response to this Item 13 is incorporated herein by reference to our Definitive Proxy Statement on Schedule 14A
to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

 ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 The
information required by this Item 14 is incorporated herein by reference to our Definitive Proxy Statement on Schedule 14A to be filed
with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

 PART
IV

 ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)
 Financial
 Statements

 Refer
to Index to Financial Statements appearing on page F-1.

 (b)
 Financial
 Statement Schedules

 No
financial statement schedules are provided because the information called for is not required or is shown in the financial statements
or the notes thereto.

 (c)
 Exhibits

 The
exhibits listed below are filed or incorporated by reference as a part of this report.

 Exhibit
 No.

 Description

 2.1#

 Asset
 Purchase Agreement, dated July 14, 2021, by and between Sanara MedTech Inc., as Purchaser, and Rochal Industries, LLC, as Seller
 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 19, 2021).

 2.2#

 Agreement
 and Plan of Merger, dated April 1, 2022, by and among Sanara MedTech Inc., United Wound and Skin Solutions, LLC, Precision Healing
 Inc., PH Merger Sub I, Inc., PH Merger Sub II, LLC and Furneaux Capital Holdco, LLC (d/b/a BlueIO) (incorporated by reference to
 Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 4, 2022).

 2.3#

 Membership
 Interest Purchase Agreement, dated July 1, 2022, by and among Sanara MedTech Inc., Scendia Biologics, LLC and Ryan Phillips (incorporated
 by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 5, 2022).

 2.4#

 Asset
 Purchase Agreement, dated August 1, 2023, by and among Sanara MedTech Inc., Sanara MedTech Applied Technologies, LLC, The Hymed Group
 Corporation, Applied Nutritionals, LLC and Dr. George D. Petito (incorporated by reference to Exhibit 2.1 to the Company's
 Current Report on Form 8-K filed on August 2, 2023).

 3.1

 Amended
 and Restated Certificate of Formation of Sanara MedTech Inc. (incorporated by reference to Exhibit 3.1 to the Company's current
 Report on Form 8-K filed on June 17, 2024).

 3.2

 Amended
 and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 22,
 2024).

 4.1

 Description of Securities (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K filed March 30, 2021).

 10.1.1

 Sanara MedTech Inc. Restated 2014 Omnibus Long Term Incentive Plan dated February 10, 2020 effective upon shareholder approval on July 9, 2020 (incorporated by reference to Exhibit 10.1.1 to the Company's Annual Report on Form 10-K filed on March 20, 2023).

 10.1.2

 Form of Restricted Stock Award Agreement for Employees under the Sanara MedTech Inc. Restated 2014 Omnibus Long Term Incentive Plan (incorporated by reference to Exhibit 10.1.2 to the Company's Annual Report on Form 10-K filed on March 30, 2021).

 10.1.3

 Form of Restricted Stock Award Agreement for Outside Directors under the Sanara MedTech Inc. Restated 2014 Omnibus Long Term Incentive Plan (2022) (incorporated by reference to Exhibit 10.1.3 to the Company's Annual Report on Form 10-K filed on March 20, 2023).

 10.1.4

 Form of Restricted Stock Award Agreement for Employees under the Sanara MedTech Inc. Restated 2014 Omnibus Long Term Incentive Plan (2023) (incorporated by reference to Exhibit 10.1.4 to the Company's Annual Report on Form 10-K filed on March 20, 2023).

 10.2.1

 Sanara MedTech Inc. 2024 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 18, 2024).

 10.2.2

 Form of Restricted Stock Award Agreement under the Sanara MedTech Inc. 2024 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed on August 12, 2024).

 10.3

 Employment Agreement, effective September 1, 2024, by and between Sanara MedTech Inc. and Ronald T. Nixon (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 23, 2024).

 10.4

 Employment Agreement, effective January 15, 2025, by and between Sanara MedTech Inc. and Elizabeth B. Taylor (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 22, 2025).

 10.5

 Employment Agreement, effective April 15, 2024, by and between Sanara MedTech Inc. and Jacob A. Waldrop (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 5, 2024).

 10.6

 Amended and Restated Employment Agreement, effective January 15, 2025, by and between Sanara MedTech Inc. and Michael D. McNeil (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on January 22, 2025).

 10.7

 Amended and Restated Employment Agreement, dated April 28, 2022, by and between Sanara MedTech Inc. and Zachary B. Fleming (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 29, 2022).

 10.8

 Separation Agreement and General Release, dated as of May 29, 2024, by and between Sanara MedTech Inc. and Zachary B. Fleming (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on August 12, 2024).

 10.9

 Exclusive License Agreement dated July 8, 2019 between Sanara MedTech Inc. and Rochal Industries, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 14, 2019).

 10.9.1

 Amendment No. 1 to Exclusive License Agreement dated May 4, 2020 between Sanara MedTech Inc. and Rochal Industries, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on November 13, 2020).

 10.10

 Exclusive License Agreement dated October 1, 2019 between Sanara MedTech Inc. and Rochal Industries, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on November 14, 2019).

 10.11

 Exclusive License Agreement dated May 4, 2020 between Sanara MedTech Inc. and Rochal Industries, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 12, 2020).

 10.12

 Consulting Agreement, dated July 14, 2021, by and between Sanara MedTech Inc. and Ann Beal Salamone (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company filed on July 19, 2021 by the Company with the SEC).

 10.12.1

 First Amendment to Consulting Agreement, dated July 13, 2024, by and between Sanara MedTech Inc. and Ann Beal Salamone (incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q filed on August 12, 2024).

 10.13

 Precision Healing Inc. 2020 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on April 8, 2022).

 10.14

 Controlled Equity OfferingSM Sales Agreement, dated February 24, 2023, by and between Sanara MedTech Inc. and Cantor Fitzgerald & Co. (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed on February 24, 2023).

 10.15

 Transaction Advisory Services Agreement, dated March 1, 2023, by and between Sanara MedTech Inc. and The Catalyst Group, Inc. (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K filed on March 20, 2023).

 10.16+

 Professional Services Agreement, dated August 1, 2023, by and between Sanara MedTech Inc. and Dr. George D. Petito (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 10.17+

 Term Loan Agreement, dated April 17, 2024, by and among Sanara MedTech Inc., as borrower, the Subsidiary Guarantors party thereto, the lenders party thereto and CRG Servicing LLC, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 18, 2024).

 10.18+

 Form of Security Agreement, by and among Sanara MedTech Inc., the Subsidiary Guarantors party thereto and CRG Servicing LLC (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on April 18, 2024).

 10.19*+

 Share Subscription and Shareholders' Agreement, by and among the Company, The Russell Revocable Living Trust, Biomimetic Innovation Limited and the existing shareholders of Biomimetic Innovation Limited.

 10.20*

 First Amendment to Term Loan Agreement, dated March 19, 2025, by and among Sanara MedTech Inc., as borrower, the Subsidiary Guarantors party thereto, the lenders party thereto and CRG Servicing LLC, as administrative agent and collateral agent.

 19.1*

 Insider Trading Policy.

 21.1*

 List of Subsidiaries.

 23.1*

 Consent of Weaver and Tidwell, L.L.P.

 31.1*

 Certification of Principal Executive Officer in accordance with 18 U.S.C. Section 1350, as adopted by Section 302 of the Sarbanes-Oxley Act of 2002.

 31.2*

 Certification of Principal Financial Officer in accordance with 18 U.S.C. Section 1350, as adopted by Section 302 of the Sarbanes-Oxley Act of 2002.

 32.1**

 Certification of Principal Executive Officer in accordance with 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2**

 Certification of Principal Financial Officer in accordance with 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

 97.1

 Sanara MedTech Inc. Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Company's Annual Report on Form 10-K filed on March 25, 2024).

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover

 *
 Filed
 herewith.

 #
 Certain
 schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of
 Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally
 to the Securities and Exchange Commission or its staff upon request. If indicated on the
 first page of such agreement, certain confidential information has been excluded pursuant
 to Item 601(b)(2)(ii) of Regulation S-K. Such excluded information is not material and is
 the type that the Company treats as private or confidential.

 +
 Certain schedules
and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit
will be furnished supplementally to the Securities and Exchange Commission or its staff upon request. If indicated on the first page
of such agreement, certain confidential information has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K. Such excluded
information is not material and is the type that the Company treats as private or confidential.

 **
 The
 certifications attached as Exhibit 32.1 and Exhibit 32.2 are not deemed "filed"
 with the Securities and Exchange Commission and are not to be incorporated by reference into
 any filing of Sanara MedTech Inc. under the Securities Act of 1933, as amended, or the Securities
 Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report
 on Form 10-K, irrespective of any general incorporation language contained in such filing.

 Identifies
 a management contract or compensatory plan.

 ITEM
16. FORM 10-K SUMMARY

 None.

 SIGNATURES

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 SANARA
 MEDTECH INC.

 March

 By:

 /s/
 Elizabeth B. Taylor

 Elizabeth
 B. Taylor

 Chief
 Financial Officer

 (Principal
 Financial Officer and duly authorized officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Ronald T. Nixon

 Chairman
 and Chief Executive Officer (Principal Executive Officer)

 March

 Ronald
 T. Nixon

 /s/
 Elizabeth B. Taylor

 Chief
 Financial Officer (Principal Financial Officer)

 March

 Elizabeth
 B. Taylor

 Chief
 Accounting Officer and Chief Administrative Officer

 /s/
 Michael D. McNeil

 (Principal
 Accounting Officer)

 March

 Michael
 D. McNeil

 /s/
 Robert DeSutter

 March

 Robert
 DeSutter

 /s/
 Roszell Mack III

 March

 Roszell
 Mack III

 /s/
 Eric D. Major

 March

 Eric
 D. Major

 /s/
 Sara Ortwein

 March

 Sara
 Ortwein

 /s/
 Ann Beal Salamone

 March

 Ann
 Beal Salamone

 /s/
 Keith G. Myers

 March

 Keith
 G. Myers

 /s/
 Eric D. Tanzberger

 March

 Eric
 D. Tanzberger