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The risks and uncertainties described below may not be the only ones we face.
−Removed: If any of the risks actually occur, our business, financial condition, operating results, cash flows and prospects could be materially and adversely affected.
+Added: If any of the risks actually occur, our business, financial condition, operating results, cash flow and prospects could be materially and adversely affected.
In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
−Removed: Risk Factor Summary (This Summary is not intended to and does not describe all of the risk factors discussed below that may impact the Company.
−Removed: We urge investors to review the detailed descriptions of risk factors that follow.)
Risks Related to Our Financial Position and Need for Additional Capital
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We may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.
−Removed: Our business has a history of losses, will incur additional losses, and may never achieve profitability.
−Removed: Risks Related to Our Internal Controls
−Removed: We have identified material weaknesses in our internal control over financial reporting.
−Removed: These material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
−Removed: Compliance with Sarbanes-Oxley Act Section 404 could have a material adverse impact on our business.
−Removed: Risks Related to Our Business and Products
−Removed: We will not be able to reach profitability unless we are able to achieve our product expansion and growth goals;
−Removed: our VIVO launch plans require significant investment in infrastructure and sales representatives.
−Removed: Our research and development and commercialization efforts may depend on entering into agreements with corporate collaborators.
−Removed: We have entered into joint marketing agreements with respect to our products, and may enter into additional join marketing agreements, that will reduce our revenues from product sales.
−Removed: Royalty agreements with respect to LockeT, the surgical vessel closing pressure device, will reduce any future profits from this product.
−Removed: If we experience significant disruptions in our information technology systems, our business may be adversely affected.
−Removed: Litigation and other legal proceedings may adversely affect our business.
−Removed: If we make acquisitions or divestitures, we could encounter difficulties that harm our business.
−Removed: Failure to attract and retain sufficient qualified personnel could also impede our growth.
−Removed: Our revenues may depend on our customers’ receipt of adequate reimbursement from private insurers and government sponsored healthcare programs.
−Removed: We may be unable to compete successfully with companies in our highly competitive industry, many of whom have substantially greater resources than we do.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: A variety of risks associated with marketing our products internationally could materially adversely affect our business.
−Removed: 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.
−Removed: 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.
−Removed: We may be adversely affected by product liability claims, unfavorable court decisions or legal settlements.
−Removed: Our ability to use our net operating loss carryforwards may be limited.
−Removed: We may have to make milestone payments under the Settlement Agreement we entered into with the Department of Justice (“DOJ”).
−Removed: Risks Related to Government Regulation and our Industry
−Removed: We are subject to pervasive and continuing regulation by the FDA and other regulatory agencies.
−Removed: 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.
−Removed: Changes in trade policies among the U.S.
−Removed: 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.
−Removed: Increased tariffs or the imposition of other barriers to international trade could have a material adverse effect on our revenues and operating results.
−Removed: Product clearances and approvals can often be denied or significantly delayed.
−Removed: Although we have obtained regulatory clearance for our VIVO and LockeT products in the U.S.
−Removed: and certain non-U.S.
−Removed: jurisdictions, our business plans include expanding uses for our products, which will require additional clearances;
−Removed: and even after clearance is obtained, our products remain subject to extensive regulatory scrutiny.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Risks Related to our Intellectual Property
−Removed: 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.
−Removed: Risks Related to Ownership of Our Common Stock Including Volatility and Highly Concentrated Ownership
−Removed: Risks Related to Our Financial Position and Need for Additional Capital
−Removed: We will be required to raise additional funds to finance our operations and continue as a going concern;
−Removed: We may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.
Our operations to date have consumed substantial amounts of cash and our business, including the business of Old Catheter conducted prior to its being acquired by the Company, sustained negative cash flows from operations for the last several years.
In addition, our auditors’ report on our financial statements included in this Form 10-K contains an explanatory paragraph about the substantial doubt to continue as a going concern.
−Removed: As of March 7, 2024, we have approximately $1.86 million in cash and cash equivalents, which, together with our anticipated cash from operations, is not adequate to meet our working capital needs through May of 2024, and our business is currently not profitable.
−Removed: During the first quarter of 2023 we raised approximately $9.3 million in proceeds from securities transactions, but Merger costs and other negative cash flows have substantially depleted our cash.
−Removed: As a result, we will require future additional capital infusions including public or private financing, strategic partnerships or other arrangements with organizations that have capabilities and/or products that are complementary to our own capabilities and/or products, in order to execute our strategic vision.
+Added: As of March 14, 2025, we have approximately $787 thousand in cash and cash equivalents, which, together with our anticipated cash from operations, is not adequate to meet our working capital needs through the remainder of 2025, and our business is currently not profitable.
+Added: During 2024 we raised approximately $7.2 million in net proceeds from securities transactions, but operating costs and other negative cash flows have substantially depleted our cash.
+Added: As a result, we will require additional future capital infusions including public or private financing, strategic partnerships or other arrangements with organizations that have capabilities and/or products that are complementary to our own capabilities and/or products, in order to execute our strategic vision.
However, there can be no assurances that we can complete any financings, strategic alliances or collaborative development agreements, and the terms of such arrangements may not be advantageous to us.
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Our business has a history of losses and will incur additional losses, and we may never achieve profitability.
−Removed: Our current business primarily derives revenues from the View into Ventricular Onset System or VIVO™ System (“VIVO” or “VIVO System”).
+Added: Our current business primarily derives revenues from the View into Ventricular Onset System or VIVO™ System (“VIVO” or “VIVO System”) and our LockeT product.
VIVO is FDA cleared, and CE marked, having received FDA 510(k) clearance in June 2019.
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Our current business strategies include a plan to expand uses for VIVO, which will require additional clearances.
−Removed: While we do generate revenue, we are currently operating at a loss, and there is no guarantee that we will be able to grow revenues enough to offset our costs and realize profitability.
+Added: LockeT, a suture retention device, is a sterile, Class I product that was registered with the FDA in February 2023, at which time we began initial shipments to distributors.
+Added: In May 2023, Catheter submitted LockeT for CE Mark approval.
+Added: CE Mark approval is expected in the first half of 2025, at which time initial international shipments to distributors will begin.
+Added: While we do generate revenue, we are currently operating at a loss, and there is no guarantee that we will be able to grow revenues enough to offset our costs and achieve profitability.
To date, we have not been profitable, and our accumulated deficit was approximately $292 million at December 31, 2024.
Historically, aside from Merger costs, our losses have resulted principally from costs incurred in research and development, and from general and administrative costs associated with our operations.
−Removed: During the first quarter 2023 we raised approximately $9.3 million in proceeds from securities transactions, but Merger costs and other negative cash flows have substantially depleted our cash.
+Added: During the 2024 we raised approximately $7.2 million in net proceeds from securities transactions, but operating costs and negative cash flows have substantially depleted our cash.
However, in order to continue the commercialization of our assets consistent with our vision, we will need to conduct substantial additional research, development and clinical trials.
−Removed: Our business strategy also includes expanding uses for our products which will require us to seek additional regulatory clearances in the United States, and we also must continue to expand our patents in order to obtain meaningful patent protection for and establish freedom to commercialize our product candidates.
+Added: Our business strategy also includes expanding uses for our products which will require us to seek additional regulatory clearances in the United States and abroad, and we also must continue to expand our patents in order to obtain meaningful patent protection for and establish freedom to commercialize our product candidates.
We must also complete further clinical trials and seek regulatory approvals for any new product candidates we discover, license or acquire.
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We may never achieve profitability.
+Added: Our current cash flows are not sufficient to fund our current operations, and we believe that we will need to complete additional financings within the next three to six months.
Risks Related to Our Internal Controls
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A material weakness is a deficiency, or a 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.
−Removed: As described elsewhere in this Form 10-K and in our Quarterly Reports on Form 10-Q filed during 2023, we have identified material weaknesses in our internal control over financial reporting related 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, (3) errors with respect to the review of work performed by service providers, (4) errors in connection with accounting for the royalty obligation acquired in the merger with Old Catheter, (5) use of an incorrect discount rate in calculating the fair value of the royalty obligation and (6) timing of revenue recognition.
+Added: As described elsewhere in this Form 10-K and in our Quarterly Reports on Form 10-Q filed during 2024, we have identified material weaknesses in our internal control over financial reporting related 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 service 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.
As a result of these material weaknesses, our management has concluded that our disclosure controls were not effective as of March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024.
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Controls and Procedures” included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, we have concluded that our disclosure controls were not effective as of March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024 because material weaknesses existed in our internal control over financial reporting.
−Removed: We are in the process of formulating a plan to remediate the material weaknesses described therein;
+Added: We have formulated and are implementing a plan to remediate the material weaknesses described therein;
however, if we are unable to remediate our material weaknesses in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information in a timely or reliable manner and we may incorrectly report financial information.
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We will not be able to reach profitability unless we are able to achieve our product expansion and growth goals.
−Removed: Our goal to achieve profitability is dependent upon establishing VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias, as well as upon developing and marketing new products, such as LockeT, the wound closure device, and the successful build out of our U.S.
+Added: Our goal to achieve profitability is dependent upon establishing VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias, as well as upon developing and marketing new products, such as LockeT, the wound closure device, and our PeriKard products, and the successful build out of our U.S.
commercial infrastructure and sales force.
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To date, we have met with reimbursement specialists and are working to determine the best strategy.
+Added: Develop new products, including potentially our PeriKard products.
In addition, our sales and marketing strategy for VIVO requires us to hire additional clinical support and sales representatives who are experienced in the EP field.
−Removed: In addition, we must make a significant investment building our U.S.
+Added: We must also make a significant investment building our U.S.
commercial infrastructure and sales force, a lengthy process requiring ongoing investment and a certain amount of lead time to produce the growth rate we desire.
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Therefore, these future collaborators may not commit sufficient resources to our programs to move them forward effectively, or the programs may not advance as rapidly as they might if we had retained complete control of all research, development, regulatory and commercialization decisions.
−Removed: 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.
−Removed: Old Catheter entered into a Joint Marketing Agreement with Stereotaxis, Inc.
−Removed: in January 2021, as subsequently amended in January 2022 and May 2022, pursuant to which Stereotaxis agrees to promote our VIVO System to customers who may benefit from the use of VIVO in robotic or non-robotic electrophysiology procedures.
−Removed: Pursuant to the agreement, Stereotaxis can perform promotional activity at any hospital globally that has a Stereotaxis Robotic Magnetic Navigation System, referred to herein as a robotic hospital, and where VIVO has appropriate regulatory clearances.
−Removed: In addition, Stereotaxis will act as a spot distributor for us at mutually agreed upon hospitals where the VIVO System is included as a line item within a Stereotaxis quote.
−Removed: In exchange for its marketing, distribution and support activity, Stereotaxis receives a payment equal to 45% of the revenue generated from VIVO at robotic hospitals.
−Removed: After the initial sale of VIVO products to customers by Stereotaxis, Catheter will be responsible for selling additional VIVO-related products to the customers but will continue to owe the 45% payment to Stereotaxis with respect to any such sales.
−Removed: The agreement has a term that runs through December 31, 2025, provided however, that the agreement will automatically extend for successive two-year terms unless either party provides the other written notice of termination at least one year prior to the next-scheduled termination date.
−Removed: Stereotaxis will continue to be entitled to receive the 45% payments described above for a period of six months following termination of the agreement.
−Removed: Although we believe that this agreement is in the best interest of our business and our stockholders, it will materially reduce the revenues that we receive from VIVO products that are sold by Stereotaxis, and any similar agreements entered into in the future may have the same impact.
+Added: Economic uncertainty or downturns, and related tariffs, particularly as they impact particular industries, could adversely affect our business and results of operations.
+Added: In recent years, the U.S.
+Added: and other significant markets have experienced inflationary pressures and cyclical downturns, and worldwide economic conditions remain uncertain.
+Added: Economic uncertainty and associated macroeconomic conditions make it extremely difficult for our partners, suppliers, and us to accurately forecast and plan future business activities and could cause our customers to slow spending on our offerings and could limit the ability of hospitals to purchase sufficient quantities of our products.
+Added: Inflationary pressures may lead to increases in the cost of our products, freight, overhead costs or wage rates and may adversely affect our operating results.
+Added: Sustained inflationary pressures may have an adverse effect on our ability to produce and market our products cost effectively.
+Added: A significant downturn in the domestic or global economy may cause our customers to pause, delay, or cancel spending on our products or seek to lower their costs by exploring alternative providers or our competitors.
+Added: To the extent purchases of our products are perceived by customers and potential customers as discretionary, our revenue may be disproportionately affected by delays or reductions in general healthcare spending.
+Added: Also, competitors may respond to challenging market conditions by lowering prices and attempting to lure away our customers.
+Added: the current, volatile, political environment affecting tariffs and economic policies adopted by the U.S.
+Added: and foreign governments can pose a significant risk to our business by increasing costs of raw materials, disrupting supply chains and making it harder to obtain supplies, and limiting product availability, which can lead to higher prices for our customers as well as reduced for the Company.
+Added: We cannot predict the timing, strength, or duration of any economic disruption or any subsequent recovery generally, or in any particular industry.
+Added: If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be materially adversely affected.
+Added: Artificial intelligence-based platforms may present new risks and challenges to our business.
+Added: Artificial Intelligence, or AI, technologies may exacerbate existing risks, including risks associated with data privacy, cybersecurity, IP, healthcare fraud and abuse, drug development and manufacturing, and risks to patients or human subjects in clinical trials.
+Added: AI also introduces new risks, due to the autonomous nature of the technology, which, in some cases, may be deployed to perform tasks, inform decisions, automate decisions, and make predictions, sometimes using unverified or false information.
+Added: AI may amplify biased and discriminatory decision making, perform unreliably and malfunction, generate insights which are difficult to interpret and explain, and cause direct harm to individuals or groups.
+Added: Regulators are proposing, adopting, and implementing new AI laws and regulations.
+Added: We may be required to change our business practices and policies as a result of such laws and regulations and may incur substantial compliance-related costs.
+Added: Regulators are also using existing laws and regulations to take enforcement actions related to the deployment of AI in ways that result in non-compliance with current laws and regulations.
+Added: If we fail to comply with AI laws and regulations, we may be subject to sanctions, fines, and reputational damage, orders to stop certain processing of personal data, orders to delete certain data or destroy AI algorithms derived from data collection, legal action on behalf of impacted individuals or other enforcement or other actions.
+Added: If we or our vendors using AI technologies fail to take steps to protect our confidential data, trade secrets, IP and personal data, we may be subject to legal, regulatory, financial, and reputational risks.
+Added: AI technologies present significant opportunities and risks to our business.
+Added: Harnessing AI’s transformative potential may enable us to speed up the discovery and development of new products and new uses for existing products, optimize our manufacturing processes, and drive efficiencies.
+Added: Our failure to use AI technologies in a way that maintains trust, quality and control in our business activities and to capitalize on opportunities presented by AI may also place us at a competitive disadvantage.
+Added: Failure to address AI risks will reduce our ability to deliver strategic objectives.
+Added: Also, investments in AI may not realize the benefits that were anticipated.
+Added: We have previously 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.
+Added: We have previously entered into joint marketing agreements that materially reduced the revenues that we received from VIVO products, and although all such agreements have been terminated, we may enter into similar agreements in the future with respect to any or all of our products, and any similar agreements entered into in the future may also materially reduce our per unit product revenues.
Royalty agreements with respect to LockeT, our surgical vessel closing pressure device, will reduce any future profits from this product.
In February 2022, Old Catheter agreed to an assignment and royalty agreement for the Surgical Vessel Closing Pressure Device (“LockeT”).
−Removed: Pursuant to the agreement, Old Catheter agreed to pay a royalty fee of 5% on net sales up to $1 million.
+Added: Pursuant to the agreement, Old Catheter agreed to pay a royalty fee of 5% on net sales of up to $1 million.
Thereafter, if a patent for the Surgical Vessel Closing Pressure Device is obtained from the U.S.
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In addition, a variety of our software systems are cloud-based data management applications hosted by third-party service providers whose security and information technology systems are subject to similar risks.
−Removed: Technological interruptions could disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain and otherwise adequately service our customers, or could disrupt our customers’ ability use our products for treatments.
+Added: Technological interruptions could disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain and otherwise adequately service our customers, or could disrupt our customers’ ability to use our products for treatments.
In the event we experience significant disruptions, we may be unable to repair our systems in an efficient and timely manner.
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Failure to maintain or protect our information systems and data integrity effectively could have a material adverse effect on our business, financial condition, and results of operations.
+Added: The rate of technological innovation of our products might not keep pace with the rest of the market.
+Added: The rate of innovation for the market in which our products compete is fast-paced and requires significant resources and innovation.
+Added: If other products and technologies are developed that compete with, or may compete with, our products, it could be difficult for us to maintain our current competitive status.
+Added: Likewise, the innovation and development cycle of competitors may impact our research and development efforts and ultimately, commercial adoption of viable research and development efforts.
+Added: In addition, if we are not able to continue to commit sufficient resources to ensure that our products are compatible with other products within the electrophysiology lab, this could have a negative impact on our revenues.
Litigation and other legal proceedings may adversely affect our business.
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If we use our common stock to acquire companies, products or technologies, our stockholders may experience substantial dilution.
+Added: In addition, development of acquired products and technologies may require significant investments of cash and management time, which could materially adversely affect the development of our existing products and technology.
Failure to attract and retain sufficient qualified personnel could also impede our growth.
−Removed: Our current Interim Chief Financial Officer, Margrit Thomassen, is currently only working for us on an interim basis.
−Removed: As a result, we will need to hire a new, full-time Chief Financial Officer soon.
We do not maintain “key man” insurance policies on the lives of any of our employees, including our Executive Chairman and Chief Executive Officer, David A.
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Governmental approval of health care products does not guarantee that these third-party payers will pay for the products.
−Removed: Even if third-party payers do accept our products and services, the amounts they pay may not be adequate to enable us to realize a profit.
+Added: Even if third-party payers do accept our products and services, the amounts they pay may not be adequate to enable us to make a profit.
Legislation and regulations affecting the pricing of therapies may change before our products and services are approved for marketing, and any such changes could further limit reimbursement, if any.
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We may source alternative parts to mitigate the challenges caused by these shortages, but there is no guarantee we may be able to continually do so as we scale production to meet our growth targets.
−Removed: The unavailability of any component or supplier could result in production delays, idle manufacturing facilities, product design changes and loss of access to important technology and tools for producing and supporting our products, as well as impact our capacity production.
+Added: The unavailability of any component or supplier could result in production delays, idle manufacturing facilities, product design changes and loss of access to important technology and tools for producing and supporting our products, as well as impacting our production capacity.
Our suppliers may not be willing or able to sustainably meet our timelines or our cost, quality and volume needs, or to do so may cost us more, which may require us to replace them with other sources.
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product shortages resulting from any events affecting raw material or finished good supply or distribution or manufacturing capabilities abroad;
−Removed: the impact of the current situation relating to trade with China and tariffs and other trade barriers that may be implemented by governmental authorities;
+Added: the impact of the current situation relating to trade with China and tariffs and other trade barriers that may be implemented by governmental authorities with respect to China and other countries;
the impact of public health epidemics on the global economy;
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In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or IRC, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership by 5% stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change income may be limited.
−Removed: We completed an IRC Section 382 analysis regarding the limitation of net operating losses through December 31, 2020 and determined that ownership changes occurred in May 2020.
−Removed: Management believes further ownership changes occurred during each of the years ended December 31, 2023, 2022 and 2021.
+Added: We completed an IRC Section 382 analysis regarding the limitation of net operating losses through December 31, 2024, and determined that ownership changes occurred in during 2023 and 2024.
Accordingly, utilization of our NOLs is subject to an annual limitation for federal tax purposes under IRC Section 382.
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In addition, $61.2 million of our $63.8 million in state NOLs were also eliminated.
−Removed: As a result of these eliminations, our federal and state NOLs were reduced to $95.1 million and $70.9 million, respectively, before taking into consideration the valuation allowance.
−Removed: We may have to make milestone payments under the Settlement Agreement we entered into with the DOJ.
−Removed: We have entered into a Settlement Agreement with the Department of Justice, or DOJ, and agreements with the participating states, resolving a DOJ civil investigation concerning certain Covered Conduct (as defined in the Settlement Agreement), and the Office of Inspector General, or OIG, has agreed, in consideration of our full payment of amounts owed in the Settlement Agreement and our obligations under a Corporate Integrity Agreement, to release our permissive exclusion rights and refrain from instituting any administrative action seeking to exclude us from participating in Medicare, Medicaid, or other federal health care programs as a result of specified covered conduct.
−Removed: The Corporate Integrity Agreement has a five-year term expiring in December 2025 and imposes monitoring, reporting, certification, documentation, oversight, screening, and training obligations on us, including the hiring of a compliance officer and independent review organization;
−Removed: however, the OIG has agreed that we are not subject to the terms of the Corporate Integrity Agreement for so long as we do not carry on the legacy Ra Medical business or use the related business assets.
−Removed: Pursuant to our Settlement Agreement with the DOJ, if during fiscal 2024 our revenues exceed $10 million, we have agreed to pay the United States and certain Medicaid participating states, $1.25 million.
−Removed: Payment must be made within 90 days after the end of the fiscal year.
+Added: As a result of these eliminations, our ability to utilize the federal and state NOLs were reduced to $58.2 million and $2.6 million, respectively.
Risks Related to Governmental Regulation and our Industry
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complying with applicable cGMPs under the Quality System Regulations, or QSR;
−Removed: filing reports with the FDA of and keeping records relative to certain types of adverse events associated with devices under the medical device reporting regulation;
+Added: filing reports with the FDA and keeping records relative to certain types of adverse events associated with devices under the medical device reporting regulation;
assuring that device labeling complies with device labeling requirements;
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Companies in our industry are subject to more frequent and more intensive reviews and investigations, often involving marketing, business practices, and product quality management.
−Removed: For example, as discussed above, on December 28, 2020, we entered into a Settlement Agreement with the DOJ to resolve a civil False Claims Act investigation and related civil action, and in connection with the Settlement Agreement, we also have reached agreements that resolve previously disclosed related investigations conducted by certain state attorneys general.
+Added: For example, on December 28, 2020, we entered into a Settlement Agreement with the DOJ to resolve a civil False Claims Act investigation and related civil action, and in connection with the Settlement Agreement, we also have reached agreements that resolve previously disclosed related investigations conducted by certain state attorneys general.
Under the Settlement Agreement, and the agreements with the participating states, we were required to make an initial payment of $2.5 million, of which we paid $2.4 million in December 2020 and $0.1 million in April 2021.
We also were required to make a payment of $5.0 million as a result of the January 2023 merger with Old Catheter in January 2023, which we made in February 2023.
−Removed: We may be required to make additional payments in the future upon the achievement of revenue targets.
Additionally, federal, state and foreign governments and entities have enacted laws and issued regulations and other standards requiring increased visibility and transparency of our interactions with healthcare providers.
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We are required to report certain adverse events and production problems, if any, to the FDA and comparable foreign regulatory authorities.
−Removed: Any new legislation addressing product safety issues could result in increased costs to assure compliance.
+Added: Any new legislation addressing product safety issues could result in increased costs to ensure compliance.
The FDA and other agencies, including the DOJ, closely regulate and monitor the post-clearance or post-approval marketing and promotion of products to ensure that they are marketed and distributed only for the cleared or approved indications and in accordance with the provisions of the cleared or approved labeling.
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Prior to making certain changes to a cleared product, including certain changes to product labeling, the holder of a cleared 510(k) application may be required to submit a new premarket application and obtain clearance or approval.
−Removed: If a regulatory agency discovers previously unknown problems with our products, such as adverse events of unanticipated severity or frequency, or problems with our facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of our products, such regulatory agency or enforcement authority may impose restrictions on that product or us, including requiring withdrawal of the product from the market.
+Added: If a regulatory agency discovers previously unknown problems with our products, such as adverse events of unanticipated severity or frequency, or problems with our facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of our products, such regulatory agencies or enforcement authority may impose restrictions on that product or us, including requiring withdrawal of the product from the market.
In addition to this type of penalty for failing to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:
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In addition, the FDA conducted an unannounced facility inspection in December 2019 in connection with our previously marketed DABRA product.
−Removed: The FDA issued to us a Form 483 that included observations, related to our previously marketed DABRA product, that schedules for the adjustment, cleaning, and other maintenance of equipment have not been adequately established, a device master record index was not current, and document control procedures have not been fully established.
−Removed: We responded to the FDA with the corrective measures we are taking and to address the issues identified in the Form 483 and based on this information, the FDA issued to us an Establishment Inspection Report, or EIR, closing out the inspection.
+Added: The FDA issued us a Form 483 that included observations related to our previously marketed DABRA product, that schedules for the adjustment, cleaning, and other maintenance of equipment had not been adequately established, a device master record index was not current, and document control procedures had not been fully established.
+Added: We responded to the FDA with the corrective measures we were taking and to address the issues identified in the Form 483 and based on this information, the FDA issued to us an Establishment Inspection Report, or EIR, closing out the inspection.
All actions were completed, and the final Form 483 report was sent to the FDA on September 25, 2020.
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The FDA enforces the QSR through periodic and announced or unannounced inspections of manufacturing facilities.
−Removed: We anticipate that we and certain of our third-party component suppliers will be subject to future inspections.
+Added: We anticipate that we and certain of our third-party suppliers will be subject to future inspections.
If our facility or manufacturing processes or our suppliers’ facilities or manufacturing processes are found to be in non-compliance or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, the FDA could take legal or regulatory enforcement actions against us and/or our products, including but not limited to the cessation of sales or the initiation of a recall of distributed products, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands.
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Thus, the PPACA remains in effect in its current form.
−Removed: Further, legislative and regulatory changes under the PPACA remain possible, although the federal administration under President Biden has signaled that it plans to build on the PPACA and expand the number of people who are eligible for health insurance under it.
−Removed: It is unclear how future litigation and healthcare measures promulgated by the Biden administration or future administrations will impact the implementation of the PPACA and our business, financial condition and results of operations.
−Removed: Complying with any new legislation or reversing changes implemented under the PPACA could be time-intensive and expensive, resulting in a material adverse effect on our business.
+Added: Further, legislative and regulatory changes under the PPACA remain possible.
+Added: It is unclear how future litigation and healthcare measures promulgated by the Trump administration or future administrations will impact the implementation of the PPACA and our business, financial condition and results of operations.
+Added: Complying with any new legislation or reversing changes implemented under the PPACA could be time-consuming and expensive, resulting in a material adverse effect on our business.
Other healthcare reform legislative changes have also been proposed and adopted in the U.S.
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and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
−Removed: Therefore, we cannot be certain that we were the first to make the inventions claimed in any of our pending patent applications, or that we were the first to file for patent protection of such inventions.
+Added: Therefore, we cannot be certain whether we were the first to make the inventions claimed in any of our pending patent applications, or that we were the first to file for patent protection of such inventions.
Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from or license to third parties and are therefore reliant on our licensors or licensees.
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federal and state intellectual property laws offer only limited protection.
−Removed: Moreover, the laws of other countries in which we now, or may in the future, conduct operations or contract for services may afford little or no effective protection of our intellectual property.
−Removed: The failure to adequately protect our intellectual property and other proprietary rights could materially harm our business.
+Added: Moreover, the laws of other countries in which we now, or may in the future, conduct operations or contracts for services may afford little or no effective protection of our intellectual property.
+Added: The failure to adequately protect our intellectual property and other proprietary rights could materially damage our business.
The strength of patent rights involves complex legal and scientific questions and can be uncertain.
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If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
+Added: Third parties may assert that we are infringing their intellectual property rights, and any defense of such assertions may be unsuccessful and expensive, even if we are successful.
+Added: Successfully commercializing our products depends in part on not infringing patents held by third parties.
+Added: It is possible that one or more of our products, including those that we have developed in conjunction with third parties, infringe existing patents.
+Added: We may also be liable for patent infringement by third parties whose products we use or combine with our own and for which we have no right to indemnification.
+Added: In addition, because patent applications are maintained under conditions of confidentiality and can take many years to issue, there may be applications now pending of which we are unaware and which may later result in issued patents that our products infringe.
+Added: Determining whether a product infringes a patent involves complex legal and factual issues and may not become clear until finally determined by a court in litigation.
+Added: Our competitors may assert that our products infringe patents held by them.
+Added: Moreover, as the number of competitors in our market grows, the possibility of a patent infringement claim against us increases.
+Added: If we were unsuccessful in obtaining a license or redesigning our products, we could be subject to litigation.
+Added: If we lose in this kind of litigation, a court could require us to pay substantial damages or prohibit us from using technologies essential to our products covered by third-party patents.
+Added: An inability to use technologies essential to our products would have a material adverse effect on our financial condition, results of operations and cash flow and could undermine our ability to continue our current business operations.
+Added: Expensive intellectual property litigation is frequent in the medical device industry and may cause to incur substantial expenses to defend.
+Added: Infringement actions, validity challenges and other intellectual property claims and proceedings, whether with or without merit, can be expensive and time-consuming and would divert management’s attention from our business.
+Added: We have incurred, and expect to continue to incur substantial costs in obtaining patents and may have to incur substantial costs defending our proprietary rights.
+Added: Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow.
Risks Related to Ownership of Our Common Stock
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other events or factors, many of which are beyond our control.
−Removed: In addition, the stock market in general, and medical device companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.
+Added: In addition, the stock market in general, and medical device companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, including recent fluctuations following proposed and enacted tariffs by the US government.
Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.
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This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: The ownership of our common stock is highly concentrated, and may become more so in the near future, which may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause the company stock price to decline.
−Removed: Jenkins, our Executive Chairman of the Board, and his affiliates and family members, beneficially own or control, in the aggregate, approximately 16.9% of our outstanding shares of common stock.
−Removed: In addition, if the outstanding shares of our Series X convertible preferred stock, or Series X Preferred Stock, qualify to convert into common stock on or after July 9, 2024, which will occur if we satisfy the initial listing standards of the New York American or another securities exchange or are delisted from the NYSE American, it is possible that David A.
−Removed: Jenkins and affiliates and family members will beneficially own more than 50% of our outstanding common stock.
−Removed: Accordingly, these persons have a substantial influence, and in the future may have de facto control, over the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transactions.
−Removed: These stockholders may also delay or prevent a change of control, even if such a change of control would benefit the other stockholders.
−Removed: This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise, and may adversely affect the liquidity of our common stock.
−Removed: In addition, it is possible that after July 9, 2024, we will satisfy the controlled company provisions of the NYSE American, in which case the combined company would not be required to satisfy all of the corporate governance requirements of the NYSE American, including without limitation, requirements that a majority of the Board be independent and that the combined company have independent compensation and nominating committees.
−Removed: See “—In the near future, we may be a “controlled company” within the meaning of NYSE American rules and, as a result, we may qualify for, and may choose to rely on, exemptions from certain corporate governance requirements”.
−Removed: In the future, we may be a “controlled company” within the meaning of NYSE American rules and, as a result, we may qualify for, and may choose to rely on, exemptions from certain corporate governance requirements.
−Removed: If the outstanding shares of our Series X Preferred Stock qualify to convert into common stock on or after July 9, 2024, which will occur if we satisfy the initial listing standards of the New York American or another securities exchange or are delisted from the NYSE American, it is possible that David A.
−Removed: Jenkins and affiliates will beneficially own more than 50% of our outstanding common stock.
−Removed: In that case, the Company will be a “controlled company” as defined in Section 801 of the NYSE American Company Guide.
−Removed: Under the NYSE American rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE American corporate governance requirements, including:
−Removed: the requirement that a majority of the Company’s board of directors consists of independent directors;
−Removed: the requirement that the Company’s directors must be nominated by a Nominating Committee composed by a majority of independent directors; and
−Removed: the requirement that executive compensation must be determined or recommended to the Company’s board of directors for determination, by a Compensation Committee comprised of independent directors or by a majority of the independent directors on the Company’s board.
−Removed: Accordingly, if we qualify as a controlled company, we will likely elect to be treated as such and our stockholders will not be afforded the same protections generally as stockholders of other NYSE American-listed companies.
We are a smaller reporting company, and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies will make our common stock less attractive to investors.
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If our stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline.
−Removed: As of March 12, 2024, we had 7,573,403 outstanding shares of our common stock and outstanding options to purchase up to 614,593 shares of our common stock.
+Added: As of March 17, 2025, we had 9,268,632 outstanding shares of our common stock and outstanding options to purchase up to 2,222,434 shares of our common stock, as well as 2,157,000 shares subject to pre-funded warrants, and 15,960,613 shares subject to outstanding warrants that are currently out of the money.
At our special meeting of stockholders held on March 21, 2023, our stockholders approved the conversion of 1,993.581 shares of our Series X Preferred Stock into 1,993,581 shares of our common stock.
The remaining 12,656 shares of Series X Preferred Stock may be convertible into 1,265,601 shares of our common stock on or after July 9, 2024, in the event that we meet the initial listing standards of the NYSE American or another securities exchange or have been delisted from the NYSE American.
−Removed: Also at the special meeting, our stockholders authorized the issuance of 497,908 shares of our common stock and 7,203 shares of our convertible Series A preferred stock, which are convertible into up to 4,501,060 shares of our common stock, as well as the issuance of warrants described below.
−Removed: Since the issuance of the Series A stock on March 21, 2023, 3,500 shares have been converted into 2,187,104 shares of our common stock.
−Removed: There are 3,703 shares of our convertible Series A preferred stock currently outstanding, which are convertible into up to 2,313,956 shares of our common stock.
−Removed: In connection with our February 2022 equity offering, July 2022 warrant repricing and 2020 equity offerings, we issued warrants to investors and our placement agents and, in connection with the sale of the Dermatology Business in 2021, we issued a warrant to the broker.
−Removed: In connection with our January 2023 warrant repricing, we issued a warrant to purchase up to 331,608 shares of common stock at $4.00 per share.
−Removed: Pursuant to a private placement in January 2023, as approved by the stockholders at our March 21, 2023 special meeting of stockholders, we also issued warrants to purchase up to 9,998,186 shares of common stock at a purchase price of $3.00 per share.
−Removed: We had an aggregate of 11,042,137 warrants outstanding as of March 12, 2024.
−Removed: During the first quarter of 2020, we adopted the 2020 Inducement Equity Incentive Plan, or the 2020 Plan, for the purpose of attracting, retaining and incentivizing employees in furtherance of our success.
−Removed: As of December 31, 2023, 540 shares were available for issuance under the 2020 Plan.
In July 2023, we adopted the 2023 Equity Incentive Plan, or the 2023 Plan.
−Removed: As of March 12, 2024, 146,545 shares were available for issuance under the 2023 Plan, and options to purchase 410,000 shares were outstanding.
+Added: As of March 6, 2025, 796,615 shares were available for issuance as new awards under the 2023 Plan, options to purchase 1,681,000 shares were outstanding, and 66,667 shares of restricted stock awards had been authorized for future issuance.
The 2023 Equity Incentive Plan provides for quarterly increases in the number of shares authorized for issuance under the Plan based on a percentage of the increase in the number of shares outstanding during the quarter.
We assumed options to purchase 75,367 shares in connection with the merger with Old Catheter, and as of March 6, 2025, 16,427 of these options remained outstanding.
−Removed: In addition, in the first quarter of 2024, we issued employee and director stock options to purchase an aggregate of 410,000 shares.
+Added: We issued to officers of the Company non-plan options to purchase 525,000 shares, which were outstanding as of March 6, 2025.
If these additional shares of common stock are issued and sold, or if it is perceived that they will be sold, in the public market, this could result in additional dilution and the trading price of our common stock could decline.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.