VJET 10-Q
Flyte Aviation, Inc. (VJET)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
Commission File No.
| Catheter Precision, Inc. |
| (Exact name of registrant as specified in its charter) |
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
| | | |
| (Address of principal executive offices) | (Zip Code) |
| ( |
| (Registrant’s telephone number, including area code) |
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities Registered under Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | ||
| | | |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes
As of the close of business on May 5, 2025, the registrant had
CATHETER PRECISION, INC.
QUARTERLY REPORT ON FORM 10-Q
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
| March 31, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Notes payable | ||||||||
| Current portion of notes payable due to related parties | ||||||||
| Current portion of interest payable due to related parties | ||||||||
| Current portion of royalties payable due to related parties | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Royalties payable due to related parties | ||||||||
| Deferred tax liability | ||||||||
| Notes payable due to related parties | ||||||||
| Interest payable due to related parties | ||||||||
| Operating lease liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 16) | ||||||||
| Stockholders' Equity | ||||||||
| Preferred Stock, $ par value, shares authorized | ||||||||
| Series A Convertible Preferred Stock, $ par value, shares designated; shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Series X Convertible Preferred Stock, $ par value, shares designated; shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
| For the Three Months Ended March 31, |
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| 2025 |
2024 |
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| Revenues |
$ | $ | ||||||
| Cost of revenues |
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| Gross profit |
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| Operating expenses |
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| Selling, general and administrative |
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| Research and development |
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| Acquired in-process research and development |
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| Total operating expenses |
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| Operating loss |
( |
) | ( |
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| Other expense, net |
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| Interest income |
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| Interest expense |
( |
) | ( |
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| Other expense, net |
( |
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| Change in fair value of royalties payable due to related parties |
( |
) | ( |
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| Total other expense, net |
( |
) | ( |
) | ||||
| Loss from operations before income taxes |
( |
) | ( |
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| Income tax benefit |
( |
) | ||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Net loss per share, basic and diluted |
$ | ( |
) | $ | ( |
) | ||
| Weighted-average common shares used in computing net loss per share, basic and diluted |
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See accompanying notes to unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
(Unaudited)
| Additional |
Total |
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| Series A Convertible Preferred Stock |
Series X Convertible Preferred Stock |
Common Stock |
Paid-In |
Accumulated |
Stockholders' |
|||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Equity |
||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation |
— | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock for vested restricted stock awards |
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| Issuance of common stock for asset acquisition (see Note 14) |
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| Issuance of common stock upon release of Prepaid Series Warrants (see Note 11) |
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| Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Balance at March 31, 2025 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
| Additional |
Total |
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| Series A Convertible Preferred Stock |
Series X Convertible Preferred Stock |
Common Stock |
Paid-In |
Accumulated |
Stockholders' |
|||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Equity |
||||||||||||||||||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation |
— | — | — | |||||||||||||||||||||||||||||||||
| Conversion of Series A Convertible Preferred Stock |
( |
) | ||||||||||||||||||||||||||||||||||
| Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Balance at March 31, 2024 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| For the Three Months Ended March 31, |
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| 2025 |
2024 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Depreciation and amortization |
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| Stock-based compensation |
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| Change in fair value of royalties payable due to related parties |
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| Deferred income tax benefit |
( |
) | ||||||
| Acquired in-process research and development |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Prepaid expenses and other current assets |
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| Operating lease right-of-use assets and lease liabilities |
( |
) | ||||||
| Current portion of royalties payable due to related parties |
( |
) | ||||||
| Accounts payable |
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| Accrued expenses |
( |
) | ||||||
| Interest payable due to related parties |
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| Net cash used in operating activities |
( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Purchases of property and equipment |
( |
) | ( |
) | ||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Payment on notes payable |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS |
( |
) | ( |
) | ||||
| CASH AND CASH EQUIVALENTS, beginning of period |
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| CASH AND CASH EQUIVALENTS, end of period |
$ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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| Cash paid for interest |
$ | $ | ||||||
| SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES |
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| Fair value of common stock issued in connection with the asset acquisition |
$ | $ | ||||||
| Consideration for asset acquisition included in accrued expenses |
$ | $ | ||||||
| Property and equipment included in accrued expenses |
$ | $ | ||||||
| Property and equipment reclassified from inventories |
$ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Organization and Nature of Operations
The Company
Catheter Precision, Inc. ("Catheter" or the "Company”) was incorporated in California on September 4, 2002, and reincorporated in Delaware in July 2018. Catheter was initially formed to develop, commercialize and market its advanced excimer laser-based platform for use in the treatment of vascular and dermatological immune-mediated inflammatory diseases.
On January 9, 2023, Catheter entered into the Amended and Restated Agreement and Plan of Merger (the "Merger Agreement") with Catheter Precision, Inc. (“Old Catheter”), a privately held Delaware corporation. Under the terms of the Merger Agreement, Old Catheter became a wholly owned subsidiary of Catheter, together referred to as the Company, in a stock-for-stock merger transaction (the "Merger"). The Company’s current activities primarily relate to Old Catheter’s historical business, which comprises the design, manufacture and sale of new and innovative medical technologies in the field of cardiac electrophysiology (“EP”).
On February 17, 2025, Catheter formed a new subsidiary, Cardionomix, Inc. ("Cardionomix"), in order to pursue the potential strategic acquisition of certain assets previously held by Cardionomic, Inc. ("Cardionomic"), a third party entity that has ceased operations. Catheter owns
One of the Company’s two primary products is the VIVO System, which is an acronym for View into Ventricular Onset (“VIVO” or “VIVO System”). VIVO is a non-invasive imaging system that offers 3D cardiac mapping to help with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to EP procedures. The VIVO System is commercially available in the European Union and has been placed at several hospitals in Europe. United States Food and Drug Administration ("FDA") 510(k) clearance was received, and the Company began a limited commercial release of VIVO in 2021 in the United States.
The Company’s newest product, LockeT® (“LockeT”), is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure and is intended to temporarily secure sutures and aid clinicians in locating and removing sutures efficiently. In addition, LockeT is a sterile, Class I product that was registered with the FDA in February 2023, at which time initial shipments began to distributors. Clinical studies for LockeT began during the year ended December 31, 2023. These studies are planned to show the product’s effectiveness and benefits, including faster wound closure and earlier ambulation, potentially leading to early hospital discharge and cost benefits. This information is intended to provide crucial data for marketing. The Company recorded its first commercial sale of LockeT to distributors in May 2024.
The Company’s product portfolio also includes the Amigo® Remote Catheter System (the "AMIGO" or "AMIGO System"), a robotic arm that serves as a catheter control device. Prior to 2018, Old Catheter marketed AMIGO. The Company owns the intellectual property related to AMIGO, and this product is under consideration for future research and development of a generation 2 product.
Reverse Stock Split
No fractional shares were issued as a result of the reverse stock split. Stockholders who would otherwise have been entitled to receive a fractional share were entitled to receive their pro rata portion of the net proceeds obtained from the aggregation and sale by the exchange agent of the fractional shares resulting from the reverse stock split (reduced by any customary brokerage fees, commissions and other expenses). All references to share and per share amounts for all periods presented in the unaudited condensed consolidated financial statements have been retrospectively restated to reflect this reverse stock split. All rights to receive shares of common stock under outstanding securities, including but not limited to, warrants and options, were adjusted to give effect to the reverse stock split. Furthermore, proportionate adjustments were made to the per share exercise price and the number of shares of common stock that may be purchased upon exercise of outstanding warrants and stock options granted by the Company, and the number of shares of common stock reserved for future issuance under the Company’s Equity Incentive Plan.
Going Concern
The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from uncertainty related to its ability to continue as a going concern.
The Company has incurred recurring net losses from operations and negative cash flows from operating activities since inception. For the three months ended March 31, 2025, the Company incurred $
Management expects operating losses and negative cash flows to continue for the foreseeable future as the Company invests in its commercial capabilities and expands its product portfolio through strategic asset acquisitions. On January 14, 2025, the Company acquired
Management estimates that based on the Company’s liquidity resources, there is substantial doubt about the Company’s ability to continue as a going concern within 12 months from the date of issuance of the unaudited condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of the Company continuing to operate in the normal course of business and do not reflect any adjustments to the assets and liabilities related to the substantial doubt of its ability to continue as a going concern.
Management’s ability to continue as a going concern is dependent upon its ability to raise additional funding. Management plans to raise additional capital through public or private equity or debt financing to fulfill its operating and capital requirements for at least 12 months from the date of the issuance of the unaudited condensed consolidated financial statements. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all. Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The unaudited condensed consolidated financial statements of the Company include the accounts of the Company, Old Catheter, and Cardionomix. All intercompany transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP") applicable to interim financial statements. The Financial Accounting Standards Board (“FASB”) establishes these principles to ensure financial condition, results of operations, and cash flows are consistently reported. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative nongovernmental GAAP as found in the FASB Accounting Standards Codification ("ASC"). Certain footnotes and other financial information normally required by U.S. GAAP have been condensed or omitted in accordance with instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, such statements include all adjustments which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company. The operating results presented herein are not necessarily an indication of the results that may be expected for the year. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (“SEC”) on March 31, 2025.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The Company’s unaudited condensed consolidated financial statements are based upon a number of estimates including, but not limited to, the allowance for credit losses, evaluation of impairment of long-lived assets, valuation of long-lived assets and their associated estimated useful lives, reserves for warranty costs, fair value of royalties payable due to related parties, the fair value of contingent consideration recorded in connection with a business combination or an asset acquisition, evaluation of probable loss contingencies, fair value of warrants issued, and fair value of equity awards granted.
Concentrations of Credit Risk
The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company generally maintains cash and cash equivalent balances in various operating accounts at financial institutions with high quality credit in amounts in excess of federally insured limits of $250,000. As of March 31, 2025, the Company had deposits in financial institutions in excess of federally insured limits of $
The Company extends credit to customers in the normal course of business. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the unaudited condensed consolidated balance sheets. The Company does not require collateral from its customers to secure accounts receivable.
The Company had
Reclassifications
Certain prior period financial statement amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit. In the current period, the Company separately discloses interest income and interest expense in the condensed consolidated statement of operations. For comparative purposes, amounts in the prior periods have been reclassified to conform to current period presentations.
Segment Reporting
The Company operates in
The CODM is the Company’s chief executive officer, who reviews and evaluates condensed consolidated net loss reported on the condensed consolidated statements of operations for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. As the Company’s operations are managed at the consolidated level, there are no differences between the measurement of the reportable segments’ profit or losses and the Company’s condensed consolidated statements of operations. Segment asset measures are not used as a basis for the CODM to evaluate the performance of or to allocate resources to the segment.
The following table summarizes segment revenues and significant segment expenses included in the measure of segment profit or loss (consolidated net loss) reviewed by the CODM (in thousands):
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Less: | ||||||||
| Cost of revenues | ||||||||
| Acquired in-process research and development expense | ||||||||
| Depreciation and amortization expense | ||||||||
| Stock-based compensation expense | ||||||||
| Salaries and benefits expense | ||||||||
| Professional fees | ||||||||
| Research and development expense | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Interest expense | ||||||||
| Change in fair value of royalties payable due to related parties | ||||||||
| Income tax benefit | ( | ) | ||||||
| Other segment items (1) | ||||||||
| Segment net loss | ( | ) | ( | ) | ||||
| Reconciliation of net loss | ||||||||
| Adjustments and reconciling items | ||||||||
| Consolidated net loss | $ | ( | ) | $ | ( | ) | ||
(1) Other segment items include consulting fees of $
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity date of ninety days or less at the date of purchase to be cash equivalents. Cash and cash equivalents primarily represent funds invested in readily available checking and money market accounts.
Fair Value Measurements
Fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to identify inputs used in measuring fair value as follows:
Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 - Inputs other than the quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and
Level 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.
Cash equivalents, prepaid expenses, accounts receivable, accounts payable, and accrued expenses are reported on the condensed consolidated balance sheets at carrying value which approximates fair value due to the short-term maturities of these instruments. The carrying value of our notes payable and notes payable due to related parties approximates the instruments' fair value due to the short-term maturities of these debt instruments.
The following table details the fair value measurements within the fair value hierarchy of the Company’s financial instruments (in thousands):
| March 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Cash Equivalents | ||||||||||||||||
| Mutual funds | $ | $ | $ | $ | ||||||||||||
| Money market funds | ||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Royalties payable due to related parties | $ | $ | $ | $ | ||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Cash Equivalents | ||||||||||||||||
| Mutual funds | $ | $ | $ | $ | ||||||||||||
| Money market funds | ||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Royalties payable due to related parties | $ | $ | $ | $ | ||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
The fair value measurement of royalties payable due to related parties includes unobservable inputs that are not supported by any market data. Royalties payable due to related parties equals the present value of estimated future royalty payments. The Company applies an internally developed, revenue adjusted discount rate (“RADR”) to discount back the forecasted royalty payments. The RADR is based on the Company’s weighted average cost of capital (“WACC”) adjusted for the product revenue’s risk profile. The risk-free rate used to determine the cost of equity for the RADR is adjusted to be commensurate with the term of the royalty agreements. Furthermore, the Beta and Risk Premium used to determine the cost of equity are also adjusted to reflect the product revenue's volatility. All other inputs for the RADR and the Company’s WACC are the same.
The following tables summarize the significant unobservable inputs used in the fair value measurement of Level 3 instruments:
| March 31, 2025 | ||||||
| Instrument | Valuation Technique | Unobservable Input | Input Range | |||
| Royalties payable due to related parties | Discounted future cash flows | Revenue adjusted discount rate | % | |||
| December 31, 2024 | ||||||
| Instrument | Valuation Technique | Unobservable Input | Input Range | |||
| Royalties payable due to related parties | Discounted future cash flows | Revenue adjusted discount rate | % | |||
Increases or decreases in the fair value of royalties payable due to related parties can result from updates to assumptions, such as changes in discount rates, projected cash flows, among other assumptions. Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Changes or updates to assumptions could have a material impact on the reported fair value, the change in fair value, and the results of operations in any given period.
The table below summarizes the change in fair value of royalties payable due to related parties for the three months ended March 31, 2025 and 2024 (in thousands):
| 2025 | 2024 | |||||||
| Beginning Balance at January 1, | $ | $ | ||||||
| Change in fair value of royalties payable due to related parties | ||||||||
| Ending Balance at March 31, | $ | $ | ||||||
Accounts Receivable and Allowances for Credit Losses
Accounts receivable consists of trade receivables recorded at invoiced amounts. Accounts receivable is presented net of any discounts and allowance for credit losses, is unsecured and does not bear interest. Accounts receivable is evaluated for collectability based on historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts, including the probability of future collection and estimated loss rates based on aging schedules. Accounts receivable is assessed for collectability based on
Changes in the estimated collectability of accounts receivable are recorded in the condensed consolidated statements of operations in the period in which the estimate is revised. Accounts receivable are written off as uncollectible after all means of collection are exhausted. Any subsequent recoveries are credited to the allowance for credit losses. As of March 31, 2025 and December 31, 2024, the allowance for credit losses related to accounts receivable was immaterial.
Inventories
Inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. The Company reduces the carrying value of inventories for those items that are potentially in excess, obsolete or slow-moving based on changes in customer demand, technological developments or other economic factors.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation. Property and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:
| Machinery and equipment | ||||
| Computer hardware and software | ||||
| LockeT animation video | ||||
| VIVO DEMO/Clinical Systems |
The Company periodically reviews the residual values and estimated useful lives of each class of its property and equipment for ongoing reasonableness, considering the long-term views of their intended use and the level of planned improvements to maintain and enhance those assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective account balances and any resulting gain or loss is recognized in the Company’s condensed consolidated statements of operations. The cost of repairs and maintenance is expensed as incurred, whereas significant renewals and betterments are capitalized.
Impairment of Long-lived Assets
In accordance with ASC 360, Impairment and Disposals of Long-lived Assets, the Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value of the long-lived assets may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss equal to the excess of the assets carrying value over its fair value is recorded in the Company’s consolidated statements of operations at that date.
As a result of the sustained decline of the Company's stock, the Company assessed its long-lived assets for impairment. To evaluate whether the carrying amount of the long-lived asset group is recoverable, the Company determined the estimated future cash flows of the group for a period consistent with that of the primary assets of the group. The sum of the undiscounted cash flows was then compared to the carrying amount of the long-lived assets as of March 31, 2025. The Company concluded there was
Royalties Payable Due to Related Parties
The Company is obligated to pay royalties related to the sales of LockeT and AMIGO System under various royalty agreements executed by Old Catheter. The Company recognizes a liability for royalty fees incurred and payable based on actual sales of products under current portion of royalties payable due to related parties in the condensed consolidated balance sheets. The Company recognizes a liability for future, estimated royalty payments at fair value under the royalties payable due to related parties in the condensed consolidated balance sheets. The royalties payable due to related parties is remeasured at each reporting period. Changes in fair value of royalties payable due to related parties are recorded on the condensed consolidated statements of operations in the period in which they occur. See Note 8, Royalties Payable for additional information.
Asset acquisitions and In-process Research and Development
The Company accounts for acquisitions of assets or a group of assets that do not meet the definition of a business as asset acquisitions based on the cost to acquire the asset or group of assets, which includes certain transaction costs. In an asset acquisition, the cost to acquire is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as of the acquisition date. No goodwill is recorded in an asset acquisition.
Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as in-process research and development (“IPR&D”) in the condensed consolidated balance sheets. Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense in the condensed consolidated statements of operations as of the acquisition date.
Contingent consideration in asset acquisitions that is not accounted for as a derivative is measured and recognized when payment becomes probable and reasonably estimable. Subsequent changes in the accrued amount of contingent consideration are measured and recognized at the end of each reporting period and upon settlement as an adjustment to the cost basis of the acquired asset or group of assets, or, if related to IPR&D with no alternative future use, recognized as expense. Contingent consideration that is in the form of a sales or usage-based royalty payment is recognized as an expense as incurred.
Distinguishing Liabilities from Equity
The Company evaluates equity or liability classification for freestanding financial instruments, including convertible preferred stock, warrants, and options, pursuant to the guidance under ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company classifies as liabilities all freestanding financial instruments that are (i) mandatorily redeemable, (ii) represent an obligation to repurchase the Company’s equity shares by transferring assets, or (iii) represent an unconditional obligation (or conditional obligation if the financial instrument is not an outstanding share) to issue a variable number of shares predominantly based on a fixed monetary amount, variations in something other than the fair value of the Company’s equity shares, or variations inversely related to changes in fair value of the Company’s equity shares.
If a freestanding financial instrument does not represent an outstanding equity share and does not meet liability classification under ASC 480, the Company then assesses whether the freestanding financial instrument is indexed to its own stock and meets equity classification pursuant to ASC 815-40, Derivatives and Hedging (“ASC 815”). The Company further assesses whether the freestanding financial instruments should be classified as temporary equity. Freestanding financial instruments that are redeemable for cash or other assets at a fixed or determinable date, at the option of the holder, or upon the occurrence of an event are classified in temporary equity in accordance with ASC 480. Otherwise, the freestanding financial instruments are classified in permanent equity.
Revenue Recognition
In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company accounts for contracts with customers when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. Revenue is measured as the amount of consideration expected to be received in exchange for transferring promised goods or services. The amount of consideration to be received and revenue recognized may vary due to discounts. A performance obligation is a promise in a contract to transfer a distinct good or service. If there are multiple performance obligations in the customer contract, the Company allocates the transaction price in the contract to each performance obligation based on the relative standalone selling price. The Company does not adjust revenue for the effects of a significant financing component for contracts if the period between the transfer of control and corresponding payment is expected to be one year or less. Revenue is recognized when performance obligations in the customer contract are satisfied. This generally occurs when the customer obtains control of a promised good at a point in time or when a customer receives a promised service over time.
Pursuant to ASC 606, the Company applies the following five steps to each customer contract:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the Company satisfies a performance obligation
VIVO System
The VIVO System offers 3D cardiac mapping to help localize the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to electrophysiology studies. Customers are provided with VIVO Positioning Patch Sets, which are custom patches, that are used in conjunction with the VIVO System. The VIVO Positioning Patch Sets are integral to the functionality of the VIVO System. The VIVO System, including the VIVO Positioning Patch Sets, represents the Company’s primary performance obligation. The Company recognizes revenue when physical possession and control of the VIVO System is transferred to the customer upon delivery. The Company also offers customers software upgrades for the VIVO System, which may be purchased and paid in advance at contract inception. Software upgrades represent stand-ready services, whereby the Company promises to provide software upgrades to the customer when and as upgrades are available. Software upgrade services may be offered for initial contract terms of one to multiple years. Customers have the option to renew software upgrades services at the end of each term. The software upgrade services represent the Company's second performance obligation, which is recognized evenly over time over the contract term.
The Company invoices the customer for the VIVO System and related software upgrades after physical possession and control of the VIVO System has been transferred to the customer. Subsequent renewals for software upgrades are invoiced at inception of the renewed term. The timing of payment for the corresponding invoices depends on the credit terms identified in each customer contract. There were
LockeT
LockeT was launched by the Company in February 2023 and is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure. LockeT is intended to temporarily secure sutures and aid clinicians in locating and removing sutures efficiently. The LockeT device represents a performance obligation in the customer contract. The Company recognizes revenue when it transfers control of the LockeT device to the customer, which happens when the Company delivers the product to the customer.
The Company has elected as a practical expedient to expense as incurred any costs incurred to obtain a contract as the related amortization period would be one year or less.
Disaggregation of Revenue
The following table summarizes disaggregated product sales by geographic area (in thousands):
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Product Sales | ||||||||
| US | $ | $ | ||||||
| Europe | ||||||||
| $ | $ |
Shipping and Handling Costs
Shipping and handling costs charged to customers are included in net product sales, while all other shipping and handling costs are included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
Advertising and Marketing
Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising costs were $
Patents
The Company expenses patent costs, including related legal costs, as incurred and records such costs as selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
Research and Development
Major components of research and development costs include consulting, research grants, supplies and clinical trial expenses. Research and development expenses are charged to operations in the period incurred.
Stock-based Compensation
The Company recognizes stock-based compensation expense associated with stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) issued to employees, members of the Company’s board of directors and consultants in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). The Company evaluates whether stock-based awards should be classified and accounted for as liability or equity awards on the date of grant. Furthermore, the Company measures all stock-based awards granted based on their fair value on the date of grant. Stock options are measured at fair value using the Black-Scholes option pricing valuation model (the “Black-Scholes model”), which incorporates various assumptions, including expected term, volatility and risk-free interest rate. Stock-based compensation expense for all stock-based awards is recognized over the requisite service period, which is generally the vesting period of the respective stock award. Stock-based compensation expense for stock-based awards with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not probable or is not met, no stock-based compensation expense is recognized, and any previously recognized compensation expense is reversed. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Any resulting net deferred tax assets are evaluated for recoverability and, accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether it is more likely than not that the position will be sustained on an audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. An uncertain tax position is considered effectively settled on completion of an examination by a taxing authority if certain other conditions are satisfied. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and other expense, respectively.
Basic and Diluted Net Loss Per Share
Earnings per share attributable to common stockholders is calculated using the two-class method, which is an earnings allocation formula that determines earnings per share for the holders of the Company’s common shares and participating securities. The Company’s Series A Convertible Preferred Stock, Series X Convertible Preferred Stock, and outstanding warrants are participating securities as they contain participating rights in distributions made to common stockholders. Since the participating securities do not include a contractual obligation to share in the losses of the Company, they are not included in the calculation of net loss per share in the periods that have a net loss. In addition, common stock equivalent shares (whether or not participating) are excluded from the computation of diluted earnings per share in periods in which they have an anti-dilutive effect on net loss per common share.
Diluted net loss per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method and treasury stock method, as applicable. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Diluted net loss per share is equivalent to basic net loss per share for the periods presented herein because common stock equivalent shares from warrants, stock options, non-vested restricted stock awards, restricted stock units, Series A Convertible Preferred Stock, and Series X Convertible Preferred Stock were anti-dilutive (see Note 10, Net Loss per Share).
Net loss attributable to common stockholders consists of net income or loss, as adjusted for actual and deemed dividends declared, if applicable.
Recently Announced Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is required to adopt this standard prospectively in fiscal year 2025 for the annual reporting period ending December 31, 2025. The Company does not believe the impact of the new guidance and related codification improvements will have a material impact to its financial position, results of operations and cash flows.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires the disaggregation of certain costs and expenses in the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2027 and for interim periods beginning in 2028. The guidance may be applied on a prospective or retrospective basis and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements.
Note 3. Inventories
Inventories consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Inventories | $ | $ | ||||||
There were
Note 4. Property and Equipment
Property and equipment, net consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Computer hardware and software | ||||||||
| LockeT animation video | ||||||||
| VIVO DEMO/Clinical Systems | ||||||||
| Property and equipment, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense was $
Note 5. Intangible Assets
The following table summarizes the Company’s intangible assets as of March 31, 2025 (in thousands):
| Estimated | ||||||||||||||||
| Useful Life | Gross Carrying | Accumulated | Net Carrying | |||||||||||||
| ( Years) | Amount | Amortization | Value | |||||||||||||
| Developed technology ‐ VIVO | $ | $ | ( | ) | $ | |||||||||||
| Developed technology ‐ LockeT | ( | ) | ||||||||||||||
| Customer relationships | ( | ) | ||||||||||||||
| Trademarks/trade names ‐ VIVO | ( | ) | ||||||||||||||
| Trademarks/trade names ‐ LockeT | ( | ) | ||||||||||||||
| $ | $ | ( | ) | $ | ||||||||||||
The following table summarizes the Company’s intangible assets as of December 31, 2024 (in thousands):
| Estimated | ||||||||||||||||
| Useful Life | Gross Carrying | Accumulated | Net Carrying | |||||||||||||
| ( Years) | Amount | Amortization | Value | |||||||||||||
| Developed technology ‐ VIVO | $ | $ | ( | ) | $ | |||||||||||
| Developed technology ‐ LockeT | ( | ) | ||||||||||||||
| Customer relationships | ( | ) | ||||||||||||||
| Trademarks/trade names ‐ VIVO | ( | ) | ||||||||||||||
| Trademarks/trade names ‐ LockeT | ( | ) | ||||||||||||||
| $ | $ | ( | ) | $ | ||||||||||||
The estimated future amortization expense for the next five years and thereafter is as follows (in thousands):
| Future | ||||
| Amortization | ||||
| Years ending December 31, | Expense | |||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
The Company uses the straight-line method to determine amortization expense for its definite lived intangible assets. Amortization expense, included within selling, general and administrative expenses in the condensed consolidated statement of operations, for the Company's intangible assets was $
Note 6. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Legal expenses | $ | $ | ||||||
| Offering costs | ||||||||
| Compensation and related benefits | ||||||||
| Other accrued expenses | ||||||||
| Accrued expenses | $ | $ | ||||||
Note 7. Notes Payable
Note Payable - Director & Officer Liability Insurance
The Company purchased director and officer liability insurance coverage on October 16, 2023 for $
The Company purchased director and officer liability insurance coverage on September 26, 2024 for $
Promissory Notes (Collectively, the “Related Party Notes”)
On May 30, 2024, David A. Jenkins loaned $
On June 25, 2024, an entity controlled by Mr. Jenkins loaned $
On July 1, 2024 and July 18, 2024, the Company entered into two short-term promissory notes with an affiliate of Mr. Jenkins, wherein the affiliate loaned $
On July 25, 2024, the Company entered into a short-term promissory note with a Trust, of which Mr. Jenkins’ adult daughter is the trustee, wherein the Trust loaned $
All of these short-term promissory notes (the “Related Party Notes”) had a maturity date of August 30, 2024 and interest of
On August 23, 2024, the Company entered in the first amendment of the Related Party Notes, which extended the maturity date to January 31, 2026 and increased the interest rate to
The Related Party Notes, including all principal and interest, accelerate and become immediately due and payable upon the occurrence of certain customary events of default, including failure to pay amounts owed when due, material breach of the Company’s representations or warranties (unless waived by the holders of the Related Party Notes or cured within 10 days following notice), certain events involving the discontinuation of the Company’s business and/or certain types of proceedings involving insolvency, bankruptcy, receivership and the like.
Interest expense on the Related Party Notes was $
See Note 17, Related Parties for additional details.
Note 8. Royalties Payable
LockeT Royalty
On January 9, 2023, prior to the consummation of the Merger, Old Catheter entered in an agreement with its Convertible Promissory Noteholders (“Noteholders”), which substantially consisted of amounts due to David A. Jenkins, previously Old Catheter's Chairman of the Board of Directors prior to the Merger, and, currently, the Company’s Executive Chairman of the Board of Directors and Chief Executive Officer, to forgive all accrued interest and future interest expense in exchange for a future royalty right. Under these agreements, the Company is obligated to pay the Noteholders a total royalty equal to
An additional royalty will be paid to the inventor of the LockeT device as detailed in the Royalty Agreement. In exchange for the assignment and all rights to LockeT, the Company will pay a
The Company recorded its first sales of LockeT devices during the year ended December 31, 2024. The Company owed $
AMIGO System Royalty
During 2006 and 2007, Old Catheter entered into
| Until Royalty Payment | ||||
| Royalty Percentage | Reaches a Total of | |||
| | $ | |||
| | $ | |||
| | In perpetuity | |||
The Company is not actively marketing and selling the AMIGO System, such that there was
Note 9. Leases
The Company determines if an arrangement contains a lease at contract inception based on its ability to control a physically distinct asset in exchange for consideration. If the arrangement contains a lease, the Company then determines the classification of the lease as either operating or finance. For the three months ended March 31, 2025, and the year ended December 31, 2024, the Company only had operating leases.
For operating leases, right-of-use (“ROU”) assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The present values of future lease payments are discounted using the interest rate implicit in the lease if it is readily determinable. As most leases do not provide an implicit rate, the Company applies an incremental borrowing rate based on the information available at commencement date to determine the present value of future lease payments over the lease term. The Company benchmarked itself against other companies with similar credit ratings and of comparable quality to derive an incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term in the condensed consolidated statements of operations.
The Company elected to utilize the short-term lease exemption to exclude recognition of ROU assets and lease liabilities from the balance sheet for leases with an initial term of 12 months or less, with payments instead being expensed on a straight-line basis over the lease term. If a lease includes options to extend the lease term, the Company does not assume the option will be exercised in its initial lease term assessment unless there is reasonable certainty that the Company will renew based on an assessment of economic factors present as of the lease commencement date. The Company monitors its plans to renew its material lease each reporting period.
The Company enters into contracts that contain both lease and non-lease components. Non-lease components include costs that do not provide a right-to-use a leased asset but instead provide a service such as maintenance costs. The Company has elected to account for the lease and non-lease components together as a single component for all classes of underlying assets. Variable costs associated with the lease, such as maintenance and utilities, are not included in the measurement of ROU assets and liabilities. Variable costs are expensed when the events determining the amount of variable consideration to be paid have occurred.
South Carolina Office Lease Agreement
On September 27, 2022, Old Catheter entered into a lease agreement for office space located in Fort Mill, South Carolina. The space is used for office and general use. The lease term began on October 1, 2022, is
New Jersey Office Lease Agreement
On December 7, 2022, Old Catheter entered into a lease agreement for office space located in Augusta, New Jersey. The space is used for office and general use. The lease term began on January 1, 2023 and is
Park City Office Lease Agreement
On March 19, 2023, the Company entered into a lease agreement for office space located in Park City, Utah. The space is used for office and general use. The lease term began on May 1, 2023 and is
The following tables present supplemental balance sheet information related to operating leases for the three months ended March 31, 2025 and 2024 (in thousands):
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expense | $ | $ | ||||||
| Cash paid for leases | $ | $ | ||||||
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Weighted average remaining lease term (in years) - operating leases | ||||||||
| Weighted average discount rate - operating leases | % | % | ||||||
Future minimum lease payments for all lease obligations for the following five fiscal years and thereafter are as follows (in thousands):
| Years ending December 31: | Operating Leases | |||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| Total minimum lease payments | ||||
| Less effects of discounting | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
Operating lease right-of-use assets and lease liabilities were recorded in the condensed consolidated balance sheets as follows (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Note 10. Net Loss per Share
The Company’s Series A Convertible Preferred Stock, of which
Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share at March 31, 2025, consisted of
Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share at March 31, 2024, consisted of
Note 11. Equity Offerings
September 2024 Public Offering
On August 30, 2024, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co. Inc. as representative (the “Representative”) of the underwriters named in the Underwriting Agreement (the “Underwriters”). Pursuant to the Underwriting Agreement, the Company completed a public offering of its securities on September 3, 2024 (the “September 2024 Public Offering”) and sold an aggregate of (i)
Each Common Stock Unit consists of: (i)
Each Pre-Funded Warrant Unit consists of: (i)
Pursuant to the Underwriting Agreement, the Company granted the Representative a
Furthermore, at the closing date, the Company agreed to deliver to the Representative warrants to purchase an aggregate number of shares of Common Stock equal to
Each Series H Warrant, Series I Warrant, Series J Warrant (collectively, the “Series Warrants”), and Pre-Funded Warrant is immediately exercisable. The exercise price of the Series Warrants and Pre-Funded Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s Common Stock. Subject to limited exceptions, a holder of the Series Warrants will not have the right to exercise any portion of its Series Warrants if the holder (together with such holder’s affiliates) would beneficially own a number of shares of common stock in excess of
The Representative Warrants are exercisable months after the effective date of the Registration Statement filed by the Company on August 29, 2024. The Representative Warrants further have a Beneficial Ownership Limitation of
The Company assessed the Series Warrants, Pre-Funded Warrants, and Representative Warrants issued in connection with the September 2024 Public Offering (collectively, the “September 2024 Warrants”) and determined that they do not require liability classification pursuant to ASC 480. Furthermore, the September 2024 Warrants do not have any net cash settlement provisions that would preclude equity classification under ASC 815-40. Accordingly, the September 2024 Warrants were recorded to additional paid-in capital in the condensed consolidated balance sheets.
2024 Warrant Inducement Offer
On October 25, 2024, the Company executed the 2024 Warrant Inducement Offer (see Note 1) with certain holders of the Company’s existing warrants (Series E, Series F, Series G, Series H and Series I Warrants, collectively the “2024 Existing Warrants”). Pursuant to the terms of the 2024 Warrant Inducement Offer, the Company agreed to lower the exercise price per share of common stock for all holders of the 2024 Existing Warrants, including those that did not participate in the 2024 Warrant Inducement Offer. The 2024 Existing Warrants had exercise prices ranging from $
In consideration for the immediate exercise of the 2024 Existing Warrants for cash, the Company issued unregistered new Series K common stock purchase warrants (“Series K Warrants”) to purchase up to
In connection with the closing, the Company issued Placement Agent Warrants to the Placement Agent to purchase up to
As a result of the 2024 Warrant Inducement Offer, the Company recorded a deemed dividend for the modification of the 2024 Existing Warrants and issuance of the Series K Warrants of $
Pursuant to the terms of the 2024 Warrant Inducement Offer, in the event that the exercise of the 2024 Existing Warrants would cause a holder to exceed the beneficial ownership limitations included therein, the Company would issue the number of shares of common stock that would not cause a holder to exceed such beneficial ownership limitations and hold the remaining balance of shares of common stock in abeyance. Accordingly, as of March 31, 2025, the Company held an aggregate of
Warrants
The following table presents the number of common stock warrants outstanding:
| Warrants outstanding, December 31, 2024 | ||||
| Issued | ||||
| Exercised | ( | ) | ||
| Expired | ( | ) | ||
| Warrants outstanding, March 31, 2025 |
As of March 31, 2025 and December 31, 2024, all warrants outstanding are recorded in additional paid-in capital in the condensed consolidated balance sheets. The following table presents the number and type of common stock purchase warrants outstanding, their exercise price, and expiration dates as of March 31, 2025:
| Warrants | |||||||||
| Warrant Type | Outstanding | Exercise Price | Expiration Date | ||||||
| May 2020 Warrants | $ |
| |||||||
| May 2020 Placement Agent Warrants | $ |
| |||||||
| August 2020 Warrants | $ |
| |||||||
| August 2020 Placement Agent Warrants | $ |
| |||||||
| August 2021 Pharos Banker Warrants | $ |
| |||||||
| February 2022 Series B Warrants | $ |
| |||||||
| July 2022 Series C Warrants | $ |
| |||||||
| September 2024 Prepaid Series H Warrants (1) | $ | — | None | ||||||
| September 2024 Series I Warrants | $ |
| |||||||
| September 2024 Prepaid Series I Warrants (1) | $ | — | None | ||||||
| September 2024 Series J Warrants | $ |
| |||||||
| September 2024 Representative Warrants | $ |
| |||||||
| October 2024 Series K Warrants | $ |
| |||||||
| October 2024 Placement Agent Warrants | $ |
| |||||||
As of March 31, 2025, the warrants issued by the Company had a weighted average exercise price of $
(1) In calculating net loss per share, the Abeyance Shares were included in the weighted-average number of common shares and excluded from the anti-dilutive number of warrants excluded from the net loss per share calculation (see Note 10, Net Loss Per Share).
| Number of shares | Exercise Price | Expiration | ||
| |
|
| ||
| |
|
|
Note 12. Preferred Stock
Series X Convertible Preferred Stock
Pursuant to the Merger Agreement, all Old Catheter common stock shares issued and outstanding and convertible promissory notes, representing an aggregate principal balance of $
Series X Convertible Preferred Stock has no voting rights prior to the conversion into common stock. While there are generally no voting rights of the Series X Convertible Preferred Stock, there are protective rights regarding the sales of the company, change of control, etc. Series X Preferred Stock may convert into common stock only if the Company’s common stock has been delisted from the NYSE American or has been approved for initial listing on the NYSE American or another stock exchange, at a rate of
Other than dividends payable in shares of Common Stock, Holders of Series X Convertible Preferred Stock will be entitled to receive dividends on shares of Series X Convertible Preferred Stock equal, on an as-if-converted-to-common stock basis, and in the same form as dividends actually paid on shares of Common Stock.
Upon consummation of the Merger, each holder of Old Catheter convertible promissory notes received, in exchange for discharge of the principal of their Notes, a number of shares of the Company's Series X Convertible Preferred Stock representing a potential right to convert into the Company's common stock in an amount equal to one common share for each $
As of March 31, 2025 and December 31, 2024, only
Series A Convertible Preferred Stock
On January 9, 2023, the Company entered into a Securities Purchase Agreement for a Private Placement with the Investor. Pursuant to the Securities Purchase Agreement, shares of Series A Convertible Preferred Stock were issued, the conversion of which was approved at the Stockholders’ Meeting. After the final conversion on July 23, 2024, the Company had no shares of Series A Convertible Preferred Stock outstanding.
The Series A Convertible Preferred Stock converted into common stock at the option of the holder at the Preferred Conversion Rate, subject to certain ownership limitations as described below. The conversion price was subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.
Subject to limited exceptions, holders of shares of Series A Convertible Preferred Stock did not have the right to convert any portion of their Series A Convertible Preferred Stock if the holder, together with its affiliates, would beneficially own in excess of
Holders of Series A Convertible Preferred Stock were entitled to receive dividends on shares of Series A Convertible Preferred Stock equal, on an as-if-converted-to-common stock basis, and in the same form as dividends actually paid on shares of the common stock. Except as otherwise required by law, the Series A Convertible Preferred Stock did not have voting rights.
The Company also entered into a registration rights agreement with the purchasers requiring the Company to register for resale the shares of common stock issuable upon the conversion of the Series A Convertible Preferred Stock. Those shares of common stock were registered for resale on an effective registration statement on Form S-1.
All of the Series A Convertible Preferred Stock were converted as follows:
| Date of Conversion | Series A Shares Converted | Common Shares Issued | |||
| July 5, 2023 | |||||
| July 24, 2023 | |||||
| January 24, 2024 | |||||
| July 1, 2024 | |||||
| July 11, 2024 | |||||
| July 22, 2024 | |||||
| July 23, 2024 |
Each share of Series A Convertible Preferred Stock was convertible into approximately
As of March 31, 2025 and December 31, 2024, the Company had
Note 13. Stock-Based Compensation
2018 Equity Incentive Plan
In September 2018, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2018 Equity Incentive Plan (the “2018 Plan”), which provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, performance-based stock awards and other forms of equity compensation to the Company’s employees, directors and consultants. In July 2023, the 2018 Plan was replaced by the 2023 Equity Incentive Plan (the "2023 Plan"), as described below. As of July 2023, no additional awards could be made under the 2018 Plan and
2018 Employee Stock Purchase Plan
In September 2018, the Company's board of directors adopted the 2018 Employee Stock Purchase Plan (the “ESPP”), which permitted eligible employees to purchase the Company’s common stock at a discount through payroll deductions during defined offering periods. Eligible employees could elect to withhold up to
In April 2024, the Company formally terminated the ESPP. Since the inception of the ESPP through its termination, the Company had issued
2020 Inducement Equity Incentive Plan
In March 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Plan”) for the purpose of attracting, retaining and incentivizing employees in furtherance of the Company’s success. The 2020 Plan was adopted without stockholder approval pursuant to Rule 303A.08 of the New York Stock Exchange. The 2020 Plan is used to offer equity awards as material inducements for new employees to join the Company. Upon adoption of the 2020 Plan,
2023 Equity Incentive Plan
In July 2023, the Company’s stockholders approved the 2023 Plan as defined above, which provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, performance-based stock awards and other forms of equity compensation to the Company’s employees, directors and consultants. Stock options granted under the 2023 Plan to employees and consultants generally will vest annually over a -year period or as determined by the Board’s Compensation Committee, while grants to non-employee directors vest as determined by the Board's Compensation Committee. For the months ended March 31, 2025, the Company granted two separate sets of stock options to non-employee directors, each subject to distinct vesting schedules as approved by the Board's Compensation Committee. As of March 31, 2025 and December 31, 2024,
On January 29, 2025, the Committee approved the issuance of a total of
On January 29, 2025, the Committee approved the issuance of a total of
On January 29, 2025, the Committee approved the issuance of a total of
On January 29, 2025, the Committee approved the issuance of a total of
On January 29, 2025, the Committee approved the issuance of a total of
On January 29, 2025, the Committee approved the issuance of a total of
| Non-Employee Director Options Issued January 29, 2025 | CEO Options Issued January 29, 2025 | Employee Options (4 years) Issued January 29, 2025 | Employee Options (5 years) Issued January 29, 2025 | |||||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
| Volatility | % | % | % | % | ||||||||||||
| Expected dividend yield | % | % | % | % | ||||||||||||
| Expected life (in years) | ||||||||||||||||
Options with Performance-Based Vesting Conditions
| Employee Options with Quarterly Sales Targets Issued January 29, 2025 | Employee Options with Tiered Sales Targets Issued January 29, 2025 | |||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Expected life (in years) | ||||||||
The following is a summary of stock option activity for the 2023 Plan options for the three months ended March 31, 2025:
| Weighted | Weighted | |||||||||||||||
| Average | Average | Aggregate | ||||||||||||||
| Exercise | Remaining | Intrinsic | ||||||||||||||
| Stock Options | Price | Life | Value (in thousands) | |||||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||||
| Options exercised | — | — | ||||||||||||||
| Options granted | — | — | ||||||||||||||
| Cancelled/forfeited | ( | ) | — | — | ||||||||||||
| Outstanding at March 31, 2025 | $ | $ | ||||||||||||||
| Vested and expected to vest at March 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2025 | $ | $ | ||||||||||||||
Non-Plan Options Issued
On January 6, 2025, the Board approved and issued a total of
The Non-Plan Options issued were valued using the Black-Scholes model based on the following assumptions on the date of issue:
| Non-Plan Options Issued January 6, 2025 | ||||
| Risk-free interest rate | % | |||
| Volatility | % | |||
| Expected dividend yield | % | |||
| Expected life (in years) | ||||
The following is a summary of stock option activity for the Non-Plan options for the three months ended March 31, 2025:
| Weighted | Weighted | |||||||||||||||
| Average | Average | Aggregate | ||||||||||||||
| Exercise | Remaining | Intrinsic | ||||||||||||||
| Stock Options | Price | Life | Value (in thousands) | |||||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||||
| Options exercised | — | — | ||||||||||||||
| Options granted | — | — | ||||||||||||||
| Cancelled/forfeited | — | — | ||||||||||||||
| Outstanding at March 31, 2025 | $ | $ | ||||||||||||||
| Vested and expected to vest at March 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2025 | $ | $ | ||||||||||||||
Restricted Stock Awards
A summary of the restricted stock award activity for the three months ended March 31, 2025 is presented below:
| Weighted | ||||||||
| Average | ||||||||
| Grant Date | ||||||||
| Restricted Stock Awards | Fair Value | |||||||
| Outstanding at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Outstanding at March 31, 2025 | $ | |||||||
Stock-based compensation expense for the three months ended March 31, 2025 and 2024 was $
Total unrecognized estimated stock-based compensation expense by award type and the remaining weighted average recognition period over which such expense is expected to be recognized at March 31, 2025 was as follows:
| Unrecognized Expense (in thousands) | Remaining Weighted Average Recognition Period | |||||||
| Stock options (Non-Plan Options) | $ | |||||||
| Stock options (2023 Plan Options) | $ | |||||||
| Restricted stock awards | $ | 0.2 | ||||||
Note 14. Asset Acquisition
On January 24, 2025, the Company acquired
The Company issued
Note 15. Income Taxes
The provision for income taxes for interim periods is determined using an estimated annual effective tax rate. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, if any, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business.
For the three months ended March 31, 2025 and 2024, the Company recorded federal income tax benefit of $
The Company has no open income tax audits with any taxing authority as of March 31, 2025.
Note 16. Commitments and Contingencies
In the normal course of business, the Company is at times subject to pending and threatened legal actions. In management’s opinion, any potential loss resulting from the resolution of these matters will not have a material effect on the results of operations, financial position or cash flows of the Company.
As of March 31, 2025, the Company had no outstanding litigation.
Note 17. Related Parties
Prior to the Merger, David A. Jenkins, the Company’s current Executive Chairman of the Board and Chief Executive Officer, and Old Catheter’s Chairman of the Board of Directors, and his affiliates held approximately $
In addition to the shares described above that were issued in connection with the Notes, Mr. Jenkins and his affiliates received
Mr. Jenkins’ daughter, the Company’s non-executive Chief Operating Officer, received options to purchase
On May 1, 2024, Marie-Claude Jacques, the Company’s Chief Commercial Officer, received a non-plan option to purchase
On January 6, 2025, Philip Anderson, the Company's Chief Financial Officer, received a non-plan option to purchase
During the year ended December 31, 2024, the Company entered into various short-term promissory notes with various related parties (the “Related Party Notes”). These Related Party Notes had a maturity date of August 30, 2024 and interest rates of
The related parties and the amounts owed to each related party are summarized in the following table as of March 31, 2025 (in thousands):
| Related Party | Issuance Date | Principal Amount | Interest Accrued | ||||||
| David Jenkins |
| $ | $ | ||||||
| FatBoy Capital |
| $ | $ | ||||||
| FatBoy Capital |
| $ | $ | ||||||
| FatBoy Capital |
| $ | $ | ||||||
| Jenkins Family Charitable Institute |
| $ | $ | ||||||
On September 3, 2024, the Jenkins Family Charitable Institute also invested approximately $
On October 28, 2024, the Jenkins Family Charitable Institute exercised all
Note 18. Subsequent Events
Cardionomic Asset Acquisition
On April 22, 2025, Cardionomix entered into a definitive asset purchase agreement with the assignor of Cardionomic (“Seller”) to purchase certain assets, which relate to late-stage treatment in development for acute decompensated heart failure (the “Purchased Assets”). On May 5, 2025, the transaction closed. At closing of the transaction, the Purchased Assets were acquired by Cardionomix, as is, in exchange for the issuance of
The accounting for the acquisition is incomplete due to the proximity of the closing date of the Acquisition to the date of this filing. As a result, the Company is unable to disclose provisional fair value estimates of the identifiable net assets acquired. The Company will recognize and provide additional disclosures regarding the Acquisition within its second quarter Quarterly Report on Form 10-Q.
Issuance of Common Stock
In connection with the October 2024 Warrant Inducement Offer, shares were held in abeyance in the event that the exercise of the 2024 Existing Warrants would have otherwise caused a holder to exceed the beneficial ownership limitations set forth in the 2024 Existing Warrant. These Abeyance Shares are held as Pre-Funded Warrants until notice is received from the holder that the balance, or a portion thereof, may be issued in compliance with the beneficial ownership limitation. On April 24, 2025, the Company released and issued
May 2025 PIPE
On May 12, 2025, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) for a private placement with three institutional investors ( “May 2025 PIPE Financing”). Pursuant to the Securities Purchase Agreement, the Company sold an aggregate of (i)
Each Series L Warrant is exercisable when stockholders’ approval is obtained (“Stockholder Approval”) and expires
In connection with the May 2025 PIPE Financing, the Company also intends to issue Placement Agent Warrants to purchase an aggregate of
The Series B Convertible Preferred Stock is convertible into an aggregate of
Subject to limited exceptions, the holders of Series L Warrants, Placement Agent Warrants, and Series B Convertible Preferred Stock will not have the right to exercise any portion of their Series L Warrants or Placement Agent Warrants and convert any portion of their Series B Convertible Preferred Stock if the holder (together with such holder’s affiliates) would beneficially own a number of shares of common stock in excess of
Mercer Street Global Opportunity Fund, LLC (“Mercer”) transferred the QHSLab Notes, which are currently in default, as partial consideration for the PIPE Units and Series B Convertible Preferred Stock issued by the Company under the Assignment Agreement dated May 12, 2025. One QHSLab Note was originally issued on August 10, 2021 with a principal amount of $
In connection with the May 2025 PIPE Financing, the Company also entered into a registration rights agreement with the purchasers requiring the Company to register for resale the shares of common stock issuable upon the conversion of the Series B Convertible Preferred Stock and Series L Warrants. Failure to timely file, obtain the effectiveness of, or maintain the registration shall lead to an obligation to pay to the investors cash liquidated damages equal to
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available. This section should be read in conjunction with our unaudited condensed financial statements and related notes included in Part I, Item 1 of this report. The statements contained in this Quarterly Report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements can be identified by words such as “believe,” “anticipate,” “may,” “might,” “can,” “could,” “continue,” “depends,” “expect,” “expand,” “forecast,” “intend,” “predict,” “plan,” “rely,” “should,” “will,” “may,” “seek,” or the negative of these terms and other similar expressions, although not all forward-looking statements contain these words. These statements include, but are not limited to, our expectations with respect to our timing and need for future financings. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including, but not limited to, those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024. These risks include, but are not limited to, that: we will be required to raise additional funds to finance our operations and continue as a going concern , and we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us, and we may require additional funds sooner than our current expectations; our business has a history of losses, will incur additional losses, and may never achieve profitability; we have identified material weaknesses in our internal control over financial reporting and these material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner; compliance with Sarbanes-Oxley Act Section 404 could have a material adverse impact on our business; we will not be able to reach profitability unless we are able to achieve our product expansion and growth goals; our VIVO launch plans require significant investment in infrastructure and sales representatives; our research and development and commercialization efforts may depend on entering into agreements with corporate collaborators; we have entered into joint marketing agreements with respect to our products, and may enter into additional joint marketing agreements, that will reduce our revenues from product sales; royalty agreements with respect to LockeT, the surgical vessel closing pressure device, will reduce any future profits from this product; if we experience significant disruptions in our information technology systems, our business may be adversely affected; litigation and other legal proceedings may adversely affect our business; if we make acquisitions or divestitures, we could encounter difficulties that harm our business; failure to attract and retain sufficient qualified personnel could also impede our growth; our revenues may depend on our customers’ receipt of adequate reimbursement from private insurers and government sponsored healthcare programs; we may be unable to compete successfully with companies in our highly competitive industry, many of whom have substantially greater resources than we do; our future operating results depend upon our ability to obtain components in sufficient quantities on commercially reasonable terms or according to schedules, prices, quality and volumes that are acceptable to us, and suppliers may fail to deliver components, or we may be unable to manage these components effectively or obtain these components on such terms; if hospitals, physicians and patients do not accept our current and future products or if the market for indications for which any product candidate is approved is smaller than expected, we may be unable to generate significant revenue, if any; the recent coronavirus outbreak (“COVID-19”) adversely affected our financial condition and results of operations and we cannot provide any certainty as to whether there will be future impacts from COVID-19 or another pandemic; a variety of risks associated with marketing our products internationally could materially adversely affect our business; the impact of the military conflicts in Ukraine and Israel, and the actions that have been and could be taken by other countries, including new and stricter sanctions and actions taken in response to such sanctions, have affected, and may continue to affect, our business and results of operations, including our supply chain; if the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates; we may be adversely affected by product liability claims, unfavorable court decisions or legal settlements; our ability to use our net operating loss carryforwards may be limited; we may have to make milestone payments under the Settlement Agreement we entered into with the Department of Justice (“DOJ”); we are subject to pervasive and continuing regulation by the FDA and other regulatory agencies; our products may be subject to additional recalls, revocations or suspensions after receiving FDA or foreign approval or clearance, which could divert managerial and financial resources, harm our reputation, and adversely affect our business; changes in trade policies among the United States (“U.S.”) and other countries, in particular the imposition of new or higher tariffs, could place pressure on our average selling prices as our customers seek to offset the impact of increased tariffs on their own products; increased tariffs or the imposition of other barriers to international trade could have a material adverse effect on our revenues and operating results; product clearances and approvals can often be denied or significantly delayed, although we have obtained regulatory clearance for our VIVO and LockeT products in the U.S. and certain non-U.S. jurisdictions, our business plans include expanding uses for our products, which will require additional clearances; even after clearance is obtained, our products remain subject to extensive regulatory scrutiny; if we or our suppliers fail to comply with the FDA’s Quality System Regulation, or QSR, or any applicable state equivalent, our operations could be interrupted, and our potential product sales and operating results could suffer; if any of our products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be required to report under applicable medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions; healthcare reform initiatives and other administrative and legislative proposals may adversely affect our business, financial condition, results of operations and cash flows in our key markets, and if we are unable to obtain and maintain patent protection for our products, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our existing products and any products we may develop, and our technology may be adversely affected.
These forward-looking statements reflect our beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report and are subject to risks and uncertainties. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. We qualify all of the forward-looking statements in this Quarterly Report by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.
This Quarterly Report also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.
References to “we”, “us”, “our” and “the Company” refer to Catheter Precision, Inc.
Overview
Catheter Precision, Inc. ("Catheter" or the "Company) was incorporated in California on September 4, 2002, and reincorporated in Delaware in July 2018. Catheter was initially formed to develop, commercialize, and market its advanced excimer laser-based platform for use in the treatment of vascular and dermatological immune-mediated inflammatory diseases.
On January 9, 2023, the Company merged with the former Catheter Precision, Inc. (“Old Catheter”), a privately held Delaware corporation (the “Merger”), which became a wholly owned subsidiary of the Company. Following the Merger, we discontinued the Company’s legacy lines of business and the use of any of its DABRA-related assets. We shifted the focus of our operations to Old Catheter’s product lines. Accordingly, our current activities primarily relate to Old Catheter’s historical business, which comprises the design, manufacture and sale of new and innovative medical technologies focused on the field of cardiac electrophysiology (EP).
One of our two primary products is the View into Ventricular Onset (“VIVO” or “VIVO System”), which is a non-invasive imaging system that offers 3D cardiac mapping to help with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to EP procedures.
We have received FDA clearance to market and promote the VIVO System in the U.S. as a pre-procedure planning tool for patients with structurally normal hearts undergoing ablation treatment for idiopathic ventricular arrhythmias. VIVO allows for the acquisition, analysis, display and storage of cardiac electrophysiological data and maps for analysis by a physician. To date, VIVO has been utilized in more than 1,000 procedures in the U.S. and EU by over 30 physicians, with no reported device-related complications.
We have been cleared to label the VIVO System with the CE Mark in the EU and certain other countries. The CE Mark designation, which affirms the product’s conformity with European health, safety, and environmental protection standards, allows us to market that product in countries that are members of the EU and the European Free Trade Association. Catheter has commenced limited sales of the VIVO System in Europe and the UK through independent distributors. Catheter’s international distributors are supported by two EU-based full-time consultants.
Our newest product, LockeT® (“LockeT”), is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure. LockeT is intended to temporarily secure sutures and aid clinicians in locating and removing sutures efficiently. LockeT is a sterile Class I product that was registered with the FDA in February 2023, at which time we began initial shipments to distributors. In May 2023, Catheter submitted LockeT for CE Mark approval. CE Mark approval was received in April 2025. We are in discussion with multiple international distributors to sell LockeT in countries which require CE Mark before marketing can begin. In May 2024, we recognized our first sale of LockeT. In September 2024, we received notification of the issuance of our first LockeT patent in the country of China and we also completed a Middle East distribution agreement for LockeT. In April 2025, we received notification of the issuance of our first LockeT patent in the United States by the United States Patent and Trademark Office.
Clinical studies for LockeT began during the year ended December 31, 2023. The current studies are planned to show the product’s effectiveness and benefits, including faster wound closure, earlier ambulation, potentially leading to early hospital discharge, and lower costs for the healthcare provider and/or insurance payor. These clinical studies are intended to provide crucial data for marketing and to expand our indications for use with the FDA. For more information about our clinical studies, refer to Item 1, Business in our Form 10-K.
Our business strategy is to become a leading medical device company in the field of cardiac electrophysiology, and we are dedicated to developing and delivering electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias. We aim to establish VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias by reducing procedure time and patient complications and increasing procedural success.
Recent Developments
PeriKard Asset Acquisition
On January 14, 2025, we entered into a Membership Interest Purchase Agreement (“the Agreement”) with Cardiofront, LLC (“Seller”) to purchase the issued and outstanding membership interests of PeriKard, LLC, a wholly-owned subsidiary of Seller. The primary purpose was to purchase patented technology for commercialization within the broader cardiac treatment and electrophysiology industry. Pursuant to the Agreement, we issued 275,000 shares of our common stock valued at $113 thousand to the Seller in exchange for 100% of the membership interests of PeriKard, LLC (“Acquisition”). Furthermore, we may be obligated to make royalty payments equal to 10% of net sales of the pericardial access kit for five years following the closing date. This transaction closed on January 24, 2025.
The Acquisition was accounted for as an asset acquisition consisting primarily of a single patent for pericardial access technology. The patent was determined to be in-process research and development ("IPR&D") with no alternative future use, and accordingly, we recognized $119 thousand, consisting of $113 thousand of stock consideration and $6 thousand of direct transaction costs, as acquired in-process research and development in the condensed consolidated statements of operations for the three months ended March 31, 2025. As of March 31, 2025, we have not recognized a liability for the contingent royalty payments because they are currently not probable or reasonably estimable.
Cardionomic Asset Acquisition
In February 2025, we formed a new subsidiary, Cardionomix, Inc. (“Cardionomix”), in order to pursue the potential acquisition of certain assets previously owned by Cardionomic, Inc. We own 82% of Cardionomix's issued and outstanding common stock. Our Chief Executive Officer and Chairman of the Board and certain of his affiliates own 12%. The remaining 6% is held by certain business associates of our Chief Executive Officer.
On April 22, 2025, Cardionomix entered into an asset purchase agreement with Cardionomic, LLC (“Seller”), the assignor of Cardionomic, to purchase these assets, which relate to late-stage treatment in development for acute decompensated heart failure (the “Purchased Assets”). On May 5, 2025, the transaction closed. At closing of the transaction, the Purchased Assets were acquired by Cardionomix, as is, in exchange for the issuance of 1,000,000 restricted shares of the Company’s $0.0001 par value common stock. Additionally, Cardionomix issued the Seller a promissory note (the "Note”) in the amount of $1.5 million, with simple interest accruing at 4% per annum on the principal thereof and no interest or principal payable until the maturity date of the Note, which will be three years following issuance of the Note.
The accounting for the acquisition is incomplete due to the proximity of the closing date of the Acquisition to the date of this filing. As a result, we are unable to disclose provisional fair value estimates of the identifiable net assets acquired. We will recognize and provide additional disclosures regarding the acquisition within our second quarter Quarterly Report on Form 10-Q.
October 2024 Warrant Inducement Offer
In connection with the October 2024 Warrant Inducement Offer, in the event that the exercise of the 2024 Existing Warrants would cause a holder to exceed the beneficial ownership limitations included therein, we issued the number of shares of common stock that would not cause a holder to exceed such beneficial ownership limitations and held the remaining balance of shares of common stock in abeyance. These Abeyance Shares are held as Pre-Funded Warrants until notice is received from the holder that the balance, or portion thereof, may be issued in compliance with the beneficial ownership limitations. Accordingly, we held an aggregate of 2,157,000 shares of common stock in abeyance (the “Abeyance Shares”) as of March 31, 2025.
During the three months ended March 31, 2025, we released and issued 939,000 Abeyance Shares and subsequently, on April 24, 2025, we released and issued an additional 732,000 Abeyance Shares.
2023 Equity Incentive Plan
On July 11, 2023, we held an Annual Meeting where our stockholders approved the 2023 Equity Incentive Plan (“2023 Plan”) that authorizes us to grant options, restricted stock and other equity-based awards. In January 2025, the shareholders approved an additional 1.5 million shares of common stock for issuance under the plan. As of March 31, 2025, options to purchase an aggregate of 1,624,750 shares were outstanding and 880,365 shares of common stock were reserved for issuance pursuant to future awards under the 2023 Plan. The number of shares available for grant under the 2023 Plan also includes a quarterly increase commencing on September 1, 2023 by an amount equal to the lesser of (i) 10% of the number equal to the number of shares of common stock outstanding on the applicable adjustment date less the number of shares of common stock outstanding at the beginning of the fiscal quarter immediately preceding the adjustment date, but if such number is a negative number, then the increase will be zero; or (ii) such lesser number of shares as may be determined by the Board.
Components of our Results of Operations for the Three Months Ended March 31, 2025 and 2024
Revenues
Our current activities primarily relate to the design, manufacture and sale of new and innovative medical technologies in the field of cardiac electrophysiology.
Our two primary products are (i) the VIVO System and (ii) the LockeT device.
The VIVO System provides 3D cardiac mapping to aid with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to electrophysiology studies. Customers also have the option to purchase software upgrades in advance at contract inception. We invoice the customer for VIVO System and related software upgrade services after physical possession and control of VIVO System has been transferred. Subsequent renewals for software upgrade services are invoiced at inception of the renewed term. The timing of payment for the corresponding invoices depends on the credit terms identified in each contract. We recognize revenues for VIVO System at the point in time that the product is delivered to the customer. We recognize revenues for software upgrade services evenly over time over the term of the contract. We did not recognize any revenues for software upgrade services for the three months ended March 31, 2025 and 2024.
LockeT is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure. We recognize sales of LockeT at the point in time that the product is delivered to the customer.
We are a business that has operations within multiple countries. During the three months ended March 31, 2025 and 2024, approximately 6% and 90% of our sales were derived from customers outside the United States, respectively.
Cost of revenues
Cost of revenues for product sales consists primarily of component costs, labor costs, and manufacturing overhead incurred to produce our products and support production.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses consist of employee-related costs, including salaries, benefits and stock-based compensation expenses. Other SG&A expenses include amortization of intangible assets, depreciation of fixed assets, professional services fees, including legal, audit and tax fees, insurance fees, general corporate expenses and facility-related expenses.
Research and development expenses
Research and development (“R&D”) expenses are expensed as incurred and include research grants paid to other parties, product development, costs of clinical studies to support new products and product enhancements, including expanded indications, supplies used for internal R&D and clinical activities, and costs for outside consultants who assist with technology development and clinical affairs.
Acquired in-process research and development expenses
Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as IPR&D. Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date.
Results of Operations for the Three Months Ended March 31, 2025 and 2024
The following table sets forth the results of the Company's operations for the periods presented (in thousands):
| Three Months Ended March 31, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| Revenue |
$ | 143 | $ | 82 | $ | 61 | ||||||
| Cost of revenues |
11 | 5 | 6 | |||||||||
| Selling, general and administrative expenses |
3,485 | 2,656 | 829 | |||||||||
| Research and development expenses |
103 | 37 | 66 | |||||||||
| Acquired in-process research and development |
119 | — | 119 | |||||||||
| Change in fair value of royalties payable due to related parties |
(1,163 | ) | (86 | ) | (1,077 | ) | ||||||
| Other income (expense), net (1) |
(31 | ) | 27 | (58 | ) | |||||||
| Income tax benefit |
(724 | ) | — | (724 | ) | |||||||
(1) Constitutes the operating activities within other income (expense), net in the consolidated statements of operations, except for the change in fair value of royalties payable due to related parties that is presented separately in the table above.
Revenues
The increase in revenues of approximately $61 thousand for the three months ended March 31, 2025 as compared to the corresponding period in the prior year was due to an increase in LockeT sales that was partially offset by lower product sales of the VIVO System. LockeT sales increased by $128 thousand from $0 for the three months ended March 31, 2024, to $128 thousand for the three months ended March 31, 2025. VIVO System product sales decreased by $67 thousand from $82 thousand for the three months ended March 31, 2024 to $15 thousand for three months ended March 31, 2025. The decrease in VIVO System product sales was primarily driven by a reduction in VIVO patch sales in the European Union ("EU"), which accounted for the majority of product sales in 2024. This decline was primarily attributable to reduced sales efforts resulting from changes in commercial leadership and the prolonged medical leave of a key EU-based sales consultant. The consultant returned to full-time work late in the fourth quarter of 2024.
Cost of revenues
The increase in cost of revenues of approximately $6 thousand for the three months ended March 31, 2025 as compared to the corresponding period in the prior year was primarily due to a higher volume of products sold.
Selling, general and administrative expenses
The increase in selling, general and administrative expenses of approximately $0.8 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year was primarily due to an increase in salaries and benefits of $0.7 million and an increase in stock-based compensation expense of $0.1 million. The increase in salaries and benefits was primarily due to an increase in headcount from 15 employees for the three months ended March 31, 2024 to 22 employees for the corresponding period in 2025. Additionally, 3 employees who departed in the first quarter of 2024 were subsequently replaced with new hires with higher annual salaries who worked for the Company for the entirety of the first quarter of 2025. The increase in stock-based compensation expense was primarily due to 1,627,500 options granted to certain employees and non-employees under the 2023 Plan on January 29, 2025, and 500,000 non-plan options granted to an employee on January 3, 2025 as compared to 435,000 options granted to certain employees under the 2023 Plan during the first quarter of 2024.
Research and development expenses
The increase in research and development expenses of approximately $0.1 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year was primarily due to hiring a full-time employee in January 2025 who is tasked with research and development activities which resulted in an increase in salaries and benefits of $0.1 million.
Acquired in-process research and development
The increase in acquired in-process research development of approximately $0.1 million for the three months ended March 31, 2025 as compared the corresponding period in the prior year primarily relates to the asset acquisition completed on January 24, 2025. The Company acquired 100% of the membership interests of Perikard, LLC, which was accounted for as an asset acquisition consisting primarily of a single patent for pericardial access technology. The patent was determined to be IPR&D with no alternative future use, and accordingly, we recognized $119 thousand, consisting of $113 thousand of stock consideration and $6 thousand of direct transaction costs, as acquired in-process research and development in the condensed consolidated statements of operations for the three months ended March 31, 2025.
Change in fair value of royalties payable due to related parties
At each reporting period, the fair value of the royalties payable due to related parties is calculated using the discounted cash flow method. The decrease in the change in fair value of royalties payable due to related parties primarily relates to a decrease in the discount rate used in the discounted cash flow method. The discount rate decreased by 8% from 29% at March 31, 2024 to 21.0% at March 31, 2025, which led to a decrease of $1.1 million in the change in fair value of royalties payable due to related parties period over period.
Other income (expense), net
The decrease in other income (expense), net of approximately $58 thousand for the three months ended March 31, 2025 as compared to the corresponding period in the prior year was due to an increase in interest expense of $46 thousand primarily related to the Related Party Notes (see Note 7, Notes Payable included elsewhere in our Quarterly Report) and a decrease in interest income of $15 thousand primarily related to a decrease in short term investments recognized as cash equivalents in the condensed consolidated balance sheets period over period.
Income tax benefit
The increase in income tax benefit of approximately $724 thousand for the three months ended March 31, 2025 as compared to the corresponding period in the prior year relates to an increase in net operating losses that are not subject to limitations under Section 382 of the Internal Revenue Code.
Liquidity and capital resources
As of March 31, 2025, we had cash and cash equivalents of $0.5 million and an accumulated deficit of $296.4 million. For the three months ended March 31, 2025, net cash used by operating activities was $2.3 million. We have incurred recurring net losses from operations and negative cash flows from operating activities since inception.
We expect operating losses and negative cash flows to continue for the foreseeable future until our sales and gross profit increase sufficiently to cover our operating expenses. We expect our current operating expenses to remain relatively fixed. We believe that our current cash on hand of $1.5 million as of May 12, 2025 will not be sufficient to fund our current operations, including without limitation, to repay our outstanding short-term notes that will become due and payable on January 31, 2026. Because expected revenues are not adequate to fund our anticipated operating costs and liabilities beyond such point, we expect the need for additional financing sometime in the next month. We are currently evaluating potential means of raising cash through future debt and equity financing transactions to fund our operations and pay our debts as they come due, including a proposed at the market offering registered with the Securities and Exchange Commission as well as private placements of our securities, including our common stock and other securities convertible into or exchangeable for our common stock, such as convertible preferred stock and warrants. If we are unable to do so, we will be required to reduce our spending rate to align with expected revenue levels and cash reserves, although there can be no guarantee that we will be successful in doing so. If we are unable to do so, we will be required to suspend a portion or all of our operations and/or potentially seek relief from our creditors. We may not be able to secure financing in a timely manner or on favorable terms, if at all.
As a result of these factors, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date the condensed consolidated financial statements for the quarter ended March 31, 2025 are issued. The Company’s condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Cash Flows for the Three Months Ended March 31, 2025 and 2024 (in thousands)
| Three Months Ended March 31, |
||||||||
| 2025 |
2024 |
|||||||
| Net cash used in: |
||||||||
| Operating activities |
$ | (2,338 | ) | $ | (1,942 | ) | ||
| Investing activities |
(10 | ) | (22 | ) | ||||
| Financing activities |
(75 | ) | (110 | ) | ||||
| Net change in cash and cash equivalents |
$ | (2,423 | ) | $ | (2,074 | ) | ||
Net cash used in operating activities
During the three months ended March 31, 2025, net cash used in operating activities of $2.3 million primarily consisted of net loss of $4.0 million and non-cash adjustments related to deferred income tax benefits of $0.7 million. This was partially offset by an increase in operating assets and liabilities of $0.5 million and non-cash adjustments related to depreciation and amortization of $0.5 million and change in fair value of royalties payable due to related parties of $1.2 million.
During the three months ended March 31, 2024, net cash used in operating activities of $1.9 million consisted of a net loss of $2.7 million, partially offset by an increase in operating assets and liabilities of $0.1 million and non-cash adjustments of $0.6 million, consisting primarily of depreciation and amortization of $0.5 million and a change in fair value of royalties payable due to related parties of $0.1 million.
Net cash used in investing activities
During the three months ended March 31, 2025, net cash used in investing activities of $10 thousand consisted of purchases of property and equipment.
During the three months ended March 31, 2024, net cash used in investing activities of $22 thousand consisted of purchases of property and equipment.
Net cash provided by financing activities
During the three months ended March 31, 2025, net cash used in financing activities of $0.1 million consisted of payments on notes payable.
During the three months ended March 31, 2024, net cash used in financing activities of $0.1 million consisted of payments on notes payable.
Off-balance sheet arrangements
We have not engaged in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, as a part of our ongoing business. Accordingly, we did not have any off-balance sheet arrangements during any of the periods presented.
The Company’s Critical Accounting Estimates
The information set forth below relates to the Company’s critical accounting policies and estimates. The discussion and analysis of our financial position and results of operations is based on our condensed consolidated financial statements included elsewhere in this Quarterly Report, which have been prepared in accordance with U.S. GAAP. We believe certain of our accounting policies are critical to understanding our financial position and results of operations.
The preparation of these consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We regularly evaluate estimates and assumptions related to asset acquisitions, including the determination of the consideration transferred and related allocations to the fair value of assets acquired, provisions for legal contingencies, income taxes, deferred income tax asset valuation allowances, royalties payable due to related parties, share based compensation, evaluation of impairment of long-lived assets, valuation of long-lived assets and their associated estimated useful lives, and revenues. Our estimates are based on current facts, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.
We believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.
Accounting for long-lived assets - estimated useful lives
Intangible assets acquired from business combinations are initially measured at their estimated fair values and are then amortized on a straight-line basis over their estimated useful lives. Management evaluates whether events or circumstances have occurred that indicate the remaining useful life or carrying value of the amortizing intangible should be revised and adjusted, if necessary. Should the sum of the undiscounted expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date.
Accounting for impairment of long-lived assets
The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value of the long-lived assets may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss equal to the excess of the assets carrying value over its fair value is recorded in the Company’s consolidated statements of operations at that date.
Stock-based compensation
We calculate the cost of awards of equity instruments based on the grant date fair value of the option awards issued to employees, members of our board of directors and non-employee consultants using the Black-Scholes option pricing valuation model ("Black-Scholes model"), which incorporates various assumptions including volatility, expected term and risk-free interest rate. The expected term of the options is the estimated period of time until exercise and was determined using the SEC’s safe harbor rules, using an average of vesting and contractual terms, as we did not have sufficient historical experience of similar awards. Expected stock price volatility is based on historical volatilities of certain “guideline” companies, as the Company does not have sufficient historical stock price data. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent term. The estimated fair value of stock-based compensation awards is amortized on a straight-line basis over the relevant vesting period, adjusted for actual forfeitures at the time they occur.
Royalties payable
We are obligated to pay royalties under various royalty agreements executed by Old Cather. On January 9, 2023, prior to the consummation of the Merger, Old Catheter entered in an agreement with its convertible promissory noteholders, which substantially consisted of amounts due to David A. Jenkins, previously Old Catheter's Chairman of the Board of Directors prior to the Merger, and, currently, the Company’s Executive Chairman of the Board of Directors and Chief Executive Officer, and certain of his affiliates, to forgive all accrued interest and future interest expense in exchange for a future royalty right. We will pay to the noteholders a total royalty equal to approximately 12% of net sales of LockeT, which commenced upon the first commercial sale in 2024, through December 31, 2035.
In addition, the Company finalized an Invention Assignment and Royalty Agreement (the "Royalty Agreement") that had previously been entered into by Old Catheter with the inventor of LockeT in exchange for the assignment and all rights to LockeT. Pursuant to the agreement, we will pay a 5% royalty on net sales up to $1 million in royalties. After $1 million has been paid, and if, and only if, a U.S. patent is granted by the United States Patent and Trademark Office, then we will continue to pay a royalty at a rate of 2% of LockeT net sales, until total cumulative royalties of $10 million have been paid. No royalty payments will be due under this Royalty Agreement after December 31, 2033.
During 2006 and 2007, Old Catheter entered into two investment grant agreements with a non-profit foundation for the purpose of funding the initial development of Old Catheter's AMIGO System. The agreement calls for the payment of sales-based royalties to the foundation, upon successful commercialization of the AMIGO System. We are not currently selling the AMIGO System.
New Accounting Pronouncements
See Note 2 in the consolidated financial statements included elsewhere in this Quarterly Report for a description of new accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial position, and cash flows as applicable.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Executive Chairman of the Board and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of March 31, 2025. Our objective in designing our disclosure controls and procedures is that they provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon this evaluation, due to the existence of the material weaknesses found in our internal controls over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level. As disclosed in our Form 10-K for the year ended December 31, 2024, for the reasons set forth therein, our Chief Executive Officer and then Chief Financial Officer concluded that, as of December 31, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. In preparation of our financial statements for the period covered by this report, we identified material weaknesses in internal control over financial reporting related to our control environment that existed as of March 31, 2025, as described below. Specifically, we identified material weaknesses with respect to (1) the lack of segregation of duties, (2) the lack of designed and operating review controls with respect to oversight of the financial reporting process, and (3) review of work performed by service providers with regards to (i) management's provision of inputs for valuations to a third-party provider and (ii) the Section 382 calculation in the tax provision in that the Company's provision did not reference the correct dates when determining ownership changes resulting in material changes in the amount of expiring net operating losses available to be utilized. Notwithstanding the identified material weaknesses, management believes that the Financial Statements and related financial information included in this Annual Report fairly present, in all material respects, our balance sheets, statements of operations, shareholders’ equity and cash flows as of and for the periods presented.
Remediation Plan
Management is in the process of developing a remediation plan. The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. The Company will monitor the effectiveness of its remediation plans and will make changes management determines to be appropriate. Anticipated remediation measures include continuing assessment of the need to expand the Company’s current accounting and financial reporting teams to include individuals with requisite experience to meet the requirements associated with the increasing operations of a publicly traded company, establishment of policies and procedures to ensure full review and sign offs with respect to the inputs sent to third-party service providers as well as the reports and documentation upon the completion of their work prior to any adjustments being made to the financial statements, and establishment of policies and procedures to review the inputs to fair value and tax provision calculations as well as the outputs impacting the balance at each reporting period. In January 2025, we hired a new Chief Financial Officer and are in the process of establishing additional controls intended to eliminate the disclosed material weaknesses.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2025, which were identified in connection with management's evaluation required by paragraph (d) of Rule 13a-15 under the Securities Exchange Act of 1934, as amended, and that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Reference is made to the information disclosed under Item 3 — "Legal Proceedings" in the Fiscal 2024 10-K.
Investing in our common stock is highly speculative and involves risks. You should carefully consider the risk factors described in Part I, Item 1A, “Risk Factors” in our Form 10-K. There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should also carefully consider the risks discussed in the section titled “Forward-Looking Statements” and the matters discussed at “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Any of these risks could have an adverse effect on our business, financial condition, operating results, or prospects and could cause the trading price of our common stock to decline, which would cause investors to lose all or part of their investment. Our business, financial condition, operating results, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Previously Reported.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
During the three months ended March 31, 2025, director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
| Exhibit |
Incorporated by Reference |
|||||||||
| Number |
Description |
Form |
File No. |
Exhibit |
Filing Date |
|||||
| Amended and Restated Certificate of Incorporation of the Registrant. |
8-K |
001-38677 |
3.1 |
10/1/2018 |
||||||
| 8-K |
001-38677 |
3.1 |
11/17/2020 |
|||||||
| 8-K |
001-38677 |
3.1 |
9/20/2022 |
|||||||
| 8-K |
001-38677 |
3.1 |
8/4/2023 |
|||||||
|
|
8-K |
001-38677 |
3.1 |
7/12/2024 |
||||||
| 3.1.3C | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant (effective 1/13/2025) | 10-K | 001-38677 | 3.1 | 3/31/2025 | |||||
| Certificate of Designation of Series X Convertible Preferred Stock. |
8-K |
001-38677 |
3.1 |
1/13/2023 |
||||||
| 8-K |
001-38677 |
3.2 |
1/13/2023 |
|||||||
| 3.1.5 | Certificate of Designation of Series B Preferred Stock. | 8-K | 001-38677 | 3.1 | 5/13/2025 |
|||||
| 8-K |
001-38677 |
3.2 |
10/1/2018 |
|||||||
| 8-K |
001-38677 |
3.1 |
8/17/2022 |
|||||||
| S-1 |
333-226191 |
4.1 |
7/16/2018 |
|||||||
| 8-K |
001-38677 |
4.1 |
5/22/2020 |
|||||||
| 8-K |
001-38677 |
4.2 |
5/22/2020 |
|||||||
| 8-K |
001-38677 |
4.3 |
5/22/2020 |
|||||||
| S-1 |
333-239887 |
4.3 |
7/16/2020 |
|||||||
| S-1 |
333-239887 |
4.4 |
7/16/2020 |
|||||||
| S-1 |
333-239887 |
4.5 |
7/16/2020 |
|||||||
| 8-K | 001-38677 | 4.2 | 11/5/2024 | |||||||
| S-1/A |
333-262195 |
4.9 |
2/3/2022 |
|||||||
| 8-K | 001-38677 | 4.1 | 7/22/2022 | |||||||
| 8-K |
001-38677 |
4.4 |
2/9/2022 |
|||||||
| 10-Q |
001-38677 |
4.7 |
8/15/2022 |
|||||||
| 8-K |
001-38677 |
4.1 |
1/13/2023 |
|||||||
| 8-K |
001-38677 |
4.2 |
1/13/2023 |
|||||||
| 8-K |
001-38677 |
4.3 |
1/13/2023 |
|||||||
| 8-K |
001-38677 |
4.1 |
9/6/2024 |
|||||||
| 8-K |
001-38677 |
4.2 |
9/6/2024 |
|||||||
| 8-K |
001-38677 |
4.3 |
9/6/2024 |
|||||||
| Form of Pre-Funded Common Stock Purchase Warrant issued September 2024 |
8-K |
001-38677 |
4.4 |
9/6/2024 |
||||||
| 8-K |
001-38677 |
4.1 |
10/25/2024 |
|||||||
| 8-K/A |
001-38677 |
4.2 |
11/4/2024 |
|||||||
| 4.22 | Form of Underwriters' Warrant offered in September 2024 | S-1 | 333-279930 | 4.17 | 6/26/2024 | |||||
| 4.23 | Form of Warrant Agency Agreement dated as of September 3, 2024 entered into by and between the Registrant and Equiniti Trust Company, LLC | 8-K | 001-38677 | 4.5 | 9/6/2024 | |||||
| 4.24 | Form of Series L Warrant offered in May 2025. | 8-K | 001-38677 | 4.1 | 5/13/2025 |
| 10.31.8 | Non-plan Stock Option Award granted January 6, 2025 to Philip Anderson | 10-K | 001-38677 | 10.31.8 | 3/31/2025 |
|||||
| 10.31.9 | Offer Letter to Philip Anderson dated January 3, 2025 | 10-K | 001-38677 | 10.31.9 | 3/31/2025 |
| 101.INS* |
Inline XBRL Instance Document |
|
| 101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
|
| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| 101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| 101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| 104* |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| * |
Filed herewith. |
| @ |
The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended (Exchange Act), and is not to be incorporated by reference into any filing of Catheter Precision, Inc. under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
Pursuant to the requirements 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.
| CATHETER PRECISION, INC.
(Registrant) |
|||
| Date: May 14, 2025 |
By: |
/s/ David A. Jenkins |
|
| David A. Jenkins Executive Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
|||
| Date: May 14, 2025 |
By: |
/s/ Philip Anderson |
|
| Philip Anderson |
|||
| Chief Financial Officer |
|||
| (Principal Financial and Accounting Officer) |
|||