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Evaluation of Disclosure Controls and Procedures
−Removed: Our management, with the participation of our Executive Chairman of the Board and Chief Executive Officer and Interim 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 September 30, 2024.
−Removed: 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 Interim 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.
+Added: 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.
+Added: 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.
−Removed: 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 Interim Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level.
−Removed: As disclosed in our Form 10-K for the year ended December 31, 2023 and Forms 10-Q for the quarters ended March 31, 2024 and June 30, 2024, for the reasons set forth therein, our Chief Executive Officer and Interim Chief Financial Officer had previously concluded our disclosure controls and procedures were not effective at the reasonable assurance level.
+Added: 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.
+Added: 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.
−Removed: The Company has developed a plan to remediate the internal control weaknesses that were previously identified and we continue to make progress to implement the plan.
−Removed: The plan includes a change in the Company’s Chief Financial Officer, hiring additional accounting staff and changing the third-party technical accounting consultants.
−Removed: The material weaknesses in internal control over financial reporting related to our control environment that were previously identified are described below.
−Removed: 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, (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.
−Removed: Notwithstanding the identified material weaknesses, management believes that the Financial Statements and related financial information included in this Quarterly Report, its quarterly report for the quarters ended March 31, 2024 and June 30, 2024, and in its Quarterly and Annual Reports filed during and with respect to the year ended December 31, 2023, fairly present, in all material respects, our consolidated balance sheets, statements of operations, stockholders’ equity and cash flows as of and for the periods presented.
+Added: 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.
+Added: 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.
+Added: 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
−Removed: Management is in the process of implementing a remediation plan and believes significant progress has been made, including the following remediation items:
−Removed: Segregation of duties –We have added additional professional accounting personnel and have retained a new third party technical accounting consultant.
−Removed: In addition, we have reviewed and updated our accounting systems descriptions for sales/accounts receivable/cash receipts and purchasing/accounts payable and cash disbursements/payroll process and general ledger process and all employees have been trained on the updated procedures.
−Removed: Lack of designed and operating review controls with respect to oversight of the financial reporting process – We have recently changed our third party technical accounting consultants who assist in the financial reporting process.
−Removed: We believe that the new consulting group will improve our financial reporting process.
−Removed: Errors with respect to the review of work performed by service providers – work performed by service providers is reviewed and any errors identified are sent back to service provider for resolution before being incorporated into the company’s financial reports.
−Removed: In addition, we have recently changed third party technical consultants, and we believe that the new consulting group will improve our financial reporting process.
−Removed: Errors in connection with accounting for the royalty obligations acquired in the merger with Old Catheter – the initial royalty calculations did not include the royalty payable to the LockeT inventor.
−Removed: The process includes review by the Interim Chief Financial Officer of material contracts for any assets, liabilities or disclosures that would need to be recorded.
−Removed: Use of an incorrect discount rate in calculating the fair value of the royalty obligation in the draft financial statements (which were corrected prior to release) – Calculations are reviewed by management to ensure inputs are reasonable prior to incorporating the calculations into the Company’s financial reports.
−Removed: We have recently changed third party technical consultants, and we believe that the new consulting group will improve our financial reporting process.
−Removed: Timing of revenue recognition – Revenue is recognized when product is delivered to the customer.
−Removed: We have implemented a tracking spreadsheet for all shipments which contains delivery date, and invoicing/recognition of revenue is then dated to match the delivery date.
−Removed: This is reviewed at month end by the Interim Chief Financial Officer to ensure revenue is recognized in the proper period.
+Added: 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.
−Removed: Additional 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, establishment of policies and procedures related to the review of all contracts the Company enters into to ensure any terms or conditions are evaluated for any accounting required or accounting treatment or disclosure, and establishment of policies and procedures to review the inputs to royalties payable and other fair value calculations as well as the outputs impacting the balance at each reporting period.
+Added: 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.
+Added: 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
−Removed: Except as noted above, there have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
+Added: 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
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Reference is made to the information disclosed under Item 3 — " Legal Proceedings " in the Fiscal 2024 10-K.
−Removed: 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, 2023 and Quarterly Report on Form 10-Q filed for the period ended June 30, 2024.
−Removed: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
−Removed: Previously Reported.
−Removed: DEFAULTS UPON SENIOR SECURITIES
−Removed: MINE SAFETY DISCLOSURES
−Removed: Not applicable.
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.