Catheter Precision, Inc. 10-Q

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,” “explore,” “forecast,” “intend,” “predict,” “plan,” “pursue,” “pursuit,” “rely,” “should,” “will,” “may,” “seek,” or the negative of these terms and other similar expressions, although not all forward-looking statements contain these words. Statements concerning current conditions, operations or activities may also be forward-looking if they imply a continuation of current conditions, operations or activities. These statements include, but are not limited to, our descriptions of possible sources of financing that we are exploring, expectations regarding our operating businesses, including statements regarding our plans for conducting research and development with respect to, as well as securing appropriate FDA registrations and approvals of our products, including but not limited to those of our Cardionomix and KardioNav subsidiaries, as well as express and implied statements regarding our ability to continue as a going concern, sustain operations, and remain listed on the NYSE American, our expectations with respect to our timing and need for future financing, expectations regarding clinical studies of LockeT and the data they are expected to provide, including the impact of such data on marketing and FDA submissions, and our expectations with respect to our business strategy to become a leading medical device company in the field of cardiac electrophysiology, and to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias, and our aim to establish our products as integral tools used by cardiac electrophysiologists and their colleagues during ablation treatment of ventricular arrhythmias by reducing procedure time, patient complications and increasing procedural success, and possible sale of the QHS Notes. 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, as well as those described below. To the extent that any risk factor set forth below is inconsistent with or expands upon a risk factor set forth in the 10‑K, the risk factor described below supersedes the prior disclosure. These risks include, but are not limited to, that: if we pursue a strategic transaction, such as a crypto treasury strategy, it may change the primary focus of our business, and our management team could be diverted from pursuing our present core business and from obtaining regulatory approval for our products in development; we will be unable to develop the assets acquired in by KardioNav and Cardionomix unless we are able to obtain additional financing in sufficient amounts to fund our current business, any future businesses we may enter into and to fund our products in development, which financing may not be available on acceptable terms or at all, and could require significant changes in our management and business focus, the results of anticipated trials may not turn out as we currently expect and future trials may not occur on the time tables we expect or may be more costly than anticipated, or may be abandoned due to lack of financing or changes in our business focus, 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 or could require changes to governance or operations, and we may require additional funds sooner than our current expectations and we may be required to significantly dilute our existing stockholders in order to raise sufficient operating funds assuming that we are able to raise funds at all, which is uncertain; our stockholder equity is near the minimum level prescribed by the NYSE American and if we are unable to maintain minimum listing requirements, we are liable to be delisted from the NYSE American; our common stock may be subject to extreme market volatility and trading patterns and may experience rapid and substantial increases or decreases unrelated to our operating performance or prospects, or macro or industry fundamentals, which could occur for a number of reasons including but not limited to analyst recommendations, changes in our industry or the overall markets, significant acquisitions or other strategic transactions by or involving us or our subsidiaries, among other reasons; our operating business has a history of losses, is expected to incur additional losses, and may never achieve profitability; our past performance may not be a reliable indicator of future performance, including but not limited to in the event of a strategic transaction; historical trends should not be used to anticipate results or trends in future periods; our ability to increase our at-the-market offering availability in the future is subject to obtaining necessary approvals, certifications, legal opinions and accounting comfort letters, and there is no guaranty that we can do so successfully; 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 or engage in a strategic transaction which realigns our business focus; 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, and entering into a strategic transaction could materially alter our business model and focus; 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 operating 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 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 current business plans for our current operating business include expanding uses for our products, which if implemented would require additional clearances; even after clearance is obtained, our products remain subject to extensive regulatory scrutiny; reductions in staffing and funding at FDA and other federal agencies could cause delays in the development and approval of our products; our business may be adversely affected by changes and uncertainty in the health care industry including health care public‑policy developments; 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; 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; and there is no guarantee that we will be able to sell the QHS Notes, and any short-term sale may produce proceeds that are less than the market or stated value of such assets and less than the proceeds that could have been obtained if they were liquidated in the ordinary course. If we enter into a strategic transaction, such as a merger, acquisition or crypto treasury policy, we may become subject to additional risks in addition to those described above, which risks would be identified and disclosed in conjunction with consummating any such transaction. There is no guarantee that we will be able to identify and enter into any such strategic transaction. 33 Table of Contents The forward-looking statements in this report and identified above 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 including those described in the cautionary statements above. Given these risks and uncertainties, you should not place undue reliance on the 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”, "Catheter" and “the Company” refer to Catheter Precision, Inc. Overview Catheter Precision, Inc. 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. 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). On February 17, 2025, the Company formed a new subsidiary, Cardionomix, Inc. ("Cardionomix"), to acquire certain assets previously held by Cardionomic, Inc. ("Cardionomic"), a third-party entity that had ceased operations. 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%, while the remaining 6% of the outstanding common stock was issued to certain third parties as finder's fees for the asset acquisition (see Note 2, Summary of Significant Accounting Policies in the condensed consolidated financial statements included elsewhere in this Quarterly Report). On May 5, 2025, Cardionomix acquired certain assets primarily related to the Cardiac Pulmonary Nerve Stimulation ("CPNS") System previously held by Cardionomic (see Note 14, Asset Acquisition in the consolidated financial statements included elsewhere in this Quarterly Report). The CPNS System is a novel technology for the late-stage treatment of acute decompensated heart failure by stimulating the autonomic cardiac nerves to restore autonomic balance. The CPNS System is in development and has yet to obtain regulatory approval. On June 20, 2025, the Company formed a new subsidiary, KardioNav, Inc. ("KardioNav"), to pursue the advancement, development, and commercialization of certain intellectual property assigned to KardioNav. The Company transferred certain intellectual property related to the VIVO System to KardioNav, while Chelak iECG, Inc. ("Chelak"), an unrelated third party, transferred certain patents related to a medical device designed to interface with implanted cardiac devices to KardioNav. KardioNav intends to integrate the VIVO mapping intellectual property with Chelak's assigned patents to develop a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue. Research and development activities in animals and humans have begun. The Company owns 57% of the subsidiary's issued and outstanding common stock, while Chelak owns 33% of the subsidiary’s issued and outstanding common stock. The Company's Chief Executive Officer and Chairman of the Board of Directors and certain of his affiliates own the remaining 10% of the subsidiary’s issued and outstanding common stock. See Note 2, Summary of Significant Accounting Policies in the condensed consolidated financial statements included elsewhere in this Quarterly Report. 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 second and newest primary 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 the U.S. We recognized our first sale of LockeT in May 2024. 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 U.S. by the United States Patent and Trademark Office. In April 2025, Catheter also obtained the CE Mark approval for LockeT, permitting the marketing and sale of LockeT in the European Union, Switzerland and Turkey. Since receipt of the CE Mark, we have signed agreements with new distributors in the United Kingdom, Italy, Spain, Portugal, Switzerland, the Middle East, South Africa and Brunei. 34 Table of Contents 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 and patient ambulation/discharge, potentially resulting in higher procedural volumes 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 our products as integral tools used by cardiac electrophysiologists and their colleagues during ablation treatment of ventricular arrhythmias by reducing procedure time, patient complications and increasing procedural success. Recent Developments PeriKard Asset Acquisition On January 14, 2025, we entered into a Membership Interest Purchase Agreement ("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 of the acquisition was to purchase patented technology for commercialization within the broader cardiac treatment and electrophysiology industry. Pursuant to the Agreement, we issued 14,473 shares of our common stock valued at $113 thousand to the Seller in exchange for 100% of the membership interests of PeriKard, LLC. 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. The PeriKard pericardial access kit is a medical procedure kit and method for draining fluid from an organ. The technology is in development and has not been commercialized. 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 nine months ended September 30, 2025. As of September 30, 2025, we have not recognized a liability for the contingent royalty payments because they are currently not probable or reasonably estimable. Cardionomic Asset Acquisition On May 5, 2025, Cardionomix acquired the CPNS System. As consideration to Cardionomic, we issued 52,631 shares of our restricted common stock valued at $0.3 million, and Cardionomix issued a promissory note valued at $1.3 million (“Note Payable”). The Note Payable was issued with a principal balance of $1.5 million and stated interest of 4% per annum with no interest or principal payable until the maturity date, which is three years following the date of issuance. The acquisition was accounted for as an asset acquisition consisting primarily of the CPNS System, which was deemed to be an IPR&D Asset with no alternative future use. Accordingly, we recognized $1.9 million, consisting of $0.3 million of stock consideration, $1.3 million of note payable, and $0.3 million of direct transaction costs, as acquired in-process research and development in the condensed consolidated statement of operations for the nine months ended September 30, 2025. The minority equity interest holders are presented as non-controlling interests in the accompanying condensed consolidated balance sheets, statements of operations, and statements of stockholders’ equity as of and for the nine months ended September 30, 2025. May 2025 PIPE Financing On May 12, 2025, we 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, we sold an aggregate of (i) 1,500 PIPE Units and (ii) 1,500 additional shares of a new series of preferred stock, designated Series B Convertible Preferred Stock, par value $0.0001 per share. Each PIPE Unit consists of: (i) one share of Series B Convertible Preferred Stock and (ii) Series L common stock purchase warrants ("Series L Warrants") to purchase approximately 150 shares of common stock at an exercise price of $9.50 per share. As consideration for the PIPE Units and Series B Convertible Preferred Stock, we collected gross proceeds of $1.5 million in cash and QHSLab Notes, previously held by one of the investors, valued at $864 thousand as of May 12, 2025, before deducting placement agent fees and offering expenses of $0.4 million (collectively, “Placement Agent Fees”). The Series L Warrants are currently exercisable and expire on January 25, 2031. Each Series L Warrant is exercisable into one share of common stock and may be cashless exercised under certain circumstances. The exercise price of the Series L Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting common stock. The Series L Warrants are callable for $0.19 per share, if the volume‑weighted average price of the Company’s common stock for 20 consecutive trading days exceeds $28.50 per share and the Series L Warrants have not been exercised. In connection with the May 2025 PIPE Financing, we also issued Placement Agent Warrants to purchase an aggregate of 13,534 shares of common stock at an exercise price of $10.3075 per share to the Placement Agent. The Placement Agent Warrants terminate 5 years from the date of issuance. The Placement Agent Warrants are not callable. Except for the exercise price, contract term, call option and change in control provision, the Placement Agent Warrants have the same terms and conditions as the Series L Warrants. We determined that the Series L and Placement Agent Warrants do not require liability classification pursuant to ASC 480. Furthermore, the Series L and Placement Agent Warrants do not have any net cash settlement provisions that would preclude equity classification under ASC 815-40. Accordingly, the Series L and Placement Agent Warrants were recorded to additional paid-in capital in the condensed consolidated balance sheets. See Note 11, Equity Offerings in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the provisions for the Series L and Placement Agent Warrants. See Note 12, Preferred Stock in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series B Convertible Preferred Stock issued in connection with the May 2025 PIPE Financing. In addition, we entered into a registration rights agreement with the investors requiring the registration for resale the shares of common stock issuable upon the conversion of the Series B Convertible Preferred Stock and Series L Warrants. The registration statement became effective on May 30, 2025. Subject to specified exceptions, failure to maintain the registration statement shall lead to an obligation to pay to the investors cash liquidated damages equal to 2% of each investor’s subscription amount for then outstanding securities for every 30-day period the lapse continues, with unpaid amounts accruing interest at 18% per annum after a specified grace period. During the nine months ended September 30, 2025, we issued 115,912 shares of common stock upon the conversion of 771 shares of our Series B Convertible Preferred Stock. At the Market Offering Agreement On May 19, 2025, we entered into an At Market Offering Agreement (“ATM Agreement”) with Ladenburg. Based on the original prospectus supplement filed by the Company, under the ATM Agreement, we could offer and sell up to $1.3 million of shares of common stock, par value $0.0001 per share, through Ladenburg. On June 13, 2025, the Company filed a prospectus supplement increasing the aggregate amount available to be sold to $3.2 million under the ATM ("Shares"). On August 7, 2025, the Company filed a prospectus supplement, which supersedes and replaces the prospectus supplement dated June 13, 2025, increasing the aggregate amount of shares available to be sold to $4.3 million. The Shares have been and will continue to be issued pursuant to the Company's previously filed and effective Registration Statement on Form S-3 (File No. 333-284217), which was initially filed with the Securities and Exchange Commission on January 10, 2025 and declared effective on January 22, 2025. We have no obligation to sell, and Ladenburg is not obligated to buy or sell, any of the shares under the ATM Agreement and may at any time suspend offers under the ATM Agreement. The ATM Agreement will terminate upon the earlier of (i) the issuance and sale of all of the shares through Ladenburg on the terms and subject to the conditions set forth in the ATM Agreement or (ii) termination of the ATM Agreement as otherwise permitted thereby. The ATM Agreement may be terminated at any time by either party upon five (5) business days’ prior notice, or by Ladenburg at any time in certain circumstances, including the occurrence of a material adverse effect on the Company. The Company has agreed to pay Ladenburg a commission equal to 3% of the aggregate gross proceeds from sale of its shares of common stock. As of September 30, 2025, 868,582 shares of common stock had been sold under the ATM Agreement for gross proceeds of $4.0 million before deduction of commission and offering expenses of $0.3 million. KardioNav On June 20, 2025, the Company formed KardioNav to pursue the advancement, development, and commercialization of certain intellectual property assigned to KardioNav. The Company transferred certain intellectual property related to the VIVO System to KardioNav, while Chelak, an unrelated third party, transferred certain patents related to a medical device designed to interface with implanted cardiac devices to KardioNav. KardioNav intends to integrate the VIVO mapping intellectual property with Chelak's assigned patents to develop a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue. Research and development activities are in the planning phase for this medical device. The Company owns 57% of the subsidiary's issued and outstanding common stock, while Chelak owns 33% of the subsidiary’s issued and outstanding common stock. The Company's Chief Executive Officer and Chairman of the Board of Directors and certain of his affiliates own the remaining 10% of the subsidiary’s issued and outstanding common stock. The minority equity interest holders are presented as non-controlling interest in the accompanying condensed consolidated balance sheet, statement of operations, and statement of stockholders’ equity as of and for the nine months ended September 30, 2025. See Note 2, Summary of Significant Accounting Policies in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information. Components of our Results of Operations for the Three and Nine Months Ended September 30, 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. 35 Table of Contents 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 and nine months ended September 30, 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 and nine months ended September 30, 2025, approximately 24% and 17%, respectively, of our sales were derived from customers outside of the United States. During the three and nine months ended September 30, 2024, approximately 35% and 52%, respectively, of our sales were derived from customers outside of the United States. 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 and Nine Months Ended September 30, 2025 and 2024 The following table sets forth the results of the Company's operations for the periods presented (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 Change 2025 2024 Change Revenue $ 226 $ 96 $ 130 $ 581 $ 271 $ 310 Cost of revenues 18 10 8 43 31 12 Selling, general and administrative expenses 2,953 2,882 71 9,319 8,251 1,068 Research and development expenses 276 63 213 534 181 353 Acquired in-process research and development expenses — — - 1,967 — 1,967 Change in fair value of royalties payable due to related parties 726 (1,233 ) 1,959 (2,104 ) (2,823 ) 719 Change in fair value of trading debt securities 107 — 107 117 — 117 Other (expense) income, net (1) (78 ) (28 ) (50 ) (174 ) — (174 ) Income tax benefit (provision) (78 ) — (78 ) 1,596 — 1,596 (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 and change in fair value of trading debt securities that are presented separately in the table above. 36 Table of Contents Revenues The increase in revenues of approximately $130 thousand for the three months ended September 30, 2025 as compared to the corresponding period in the prior year was due to an increase of $92 thousand and $38 thousand in LockeT and VIVO System sales, respectively. The increase in revenues of approximately $310 thousand for the nine months ended September 30, 2025 as compared to the corresponding period in the prior year was due to an increase of $322 thousand in LockeT sales, partially offset by a $12 thousand decrease in VIVO System sales. The increase in LockeT sales is primarily the result of our sales team's efforts to effectively prove the procedural efficiency, cost-effectiveness and improved patient experience resulting from the use of LockeT compared with incumbent or competing closure devices to prospective new hospital customers. Accordingly, we have entered into long-term contracts with a number of those hospitals, which has resulted in receiving initial and repeat orders as the LockeT devices are used and consumed in clinical procedures. The nine-month period to date decrease in VIVO System sales was primarily driven by an overall 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 throughout 2024 and during the nine months ended September 30, 2025. Cost of revenues The increase in cost of revenues of approximately $8 thousand and $12 thousand for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding period in the prior year was primarily due to an increase in LockeT sales, partially offset by higher product margins for LockeT devices. We submitted larger consolidated purchase orders, received larger volume-based, supplier discounts, and achieved a higher product margin for LockeT devices for the three and nine months ended September 30, 2025 as compared to the corresponding period in the prior year. Selling, general and administrative expenses The increase in selling, general and administrative expenses of approximately $0.1 million for the three months ended September 30, 2025 as compared to the corresponding period in the prior year was due to an increase in professional fees of $0.2 million and an increase in stock-based compensation expense of $0.1 million, partially offset by a decrease in salaries and benefits of $0.2 million. The increase in professional fees primarily relates to an increase in accounting and audit fees, while the increase in stock-based compensation expense primarily relates to an increase in plan and non-plan options granted to certain employees and directors. The decrease in salaries and benefits was primarily due to the departure of the Chief Commercial Officer at the end of the second quarter of 2025 as well as the termination of two employees during the three months ended September 30, 2025 as compared to the corresponding period in the prior year. None of the terminated employees have been replaced. The increase in selling, general and administrative expenses of approximately $1.1 million for the nine months ended September 30, 2025 as compared to the corresponding period in the prior year was due to an increase in salaries and benefits of $0.7 million, an increase in stock-based compensation expense of $0.2 million, and an increase in professional fees of $0.2 million. The increase in salaries and benefits was primarily due to an increase in headcount of sales employees in the second quarter of 2024 that worked for the Company for the entirety of 2025. Additionally, the CFO position that had been vacant for most of 2024 was filled in January 2025. The increase in salaries and benefits is partially offset by the departure of certain employees in 2025 that have not been replaced during the nine months ended September 30, 2025. The increase in stock-based compensation expense primarily relates to an increase in plan and non-plan options granted to certain employees and directors, while the increase in professional fees primarily relates to an increase in accounting and audit fees. Research and development expenses The increase in research and development expenses of approximately $0.2 million for the three months ended September 30, 2025, as compared to the corresponding period in the prior year, was primarily due to an increase in professional fees o f $0.1 million and an increase in salaries and benefits of $0.1 million. The increase in research and development expenses of approximately $0.4 million for the nine months ended September 30, 2025, as compared to the corresponding period in the prior year, was primarily due to an increase in professional fees of $0.2 million and an increase in salaries and benefits of $0.2 million. The increase in professional fees primarily relates to research and development activities led by Chelak, which was engaged by KardioNav to develop a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue. The increase in salaries and benefits primarily relates to a full-time employee, who is solely tasked with research and development activities, and who was hired in January 2025. 37 Table of Contents Acquired in-process research and development expenses The increase in acquired in-process research and development expenses of approximately $2.0 million for the nine months ended September 30, 2025 as compared the corresponding period in the prior year primarily relates to two of the asset acquisitions completed in 2025. On January 24, 2025, we acquired 100% of the membership interests of Perikard, LLC for $119 thousand. Since the acquired assets were deemed to be IPR&D with no alternative future use, we recognized total acquisition costs of $119 thousand as acquired in-process research and development in the condensed consolidated statements of operations for the nine months ended September 30, 2025. On May 5, 2025, we acquired certain assets primarily related to Cardionomic’s CPNS System, which were also deemed to be IPR&D assets with no alternative future use. Accordingly, we recognized $1.9 million as acquired in-process research and development in the condensed consolidated statements of operations for the nine months ended September 30, 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 change in fair value of royalties payable due to related parties decreased approximately $2.0 million and $0.7 million for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding period in the prior year. The decrease primarily reflects lower projected LockeT sales growth and a reduction in the discount rate which decreased to 19.5%. Change in fair value of trading debt securities The change in fair value of trading debt securities of $107 thousand and $117 thousand for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year, relate primarily to the QHSLab Notes, which were received as consideration for the Series B Convertible Preferred Stock and Series L Warrants issued on May 12, 2025. Other (expense) income, net The increase in other expense, net of $50 thousand and $174 thousand for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year, primarily relates to an increase in interest expense incurred in connection with the note payable issued by Cardionomix on May 5, 2025 and the short-term note payables issued by KardioNav on July 11, 2025. Income tax benefit (provision) The increase in income tax provision of approximately $78 thousand for the three months ended September 30, 2025 and an increase in income tax benefit of $1.6 million for the nine months ended September 30, 2025, as compared to the corresponding periods in the prior year primarily relates to changes in the estimated amount of net operating losses that are not subject to limitations under Section 382 of the Internal Revenue Code . Liquidity and capital resources As of September 30, 2025, we had cash and cash equivalents of $1.1 million and an accumulated deficit of $303.8 million. For the nine months ended September 30, 2025, net cash used in operating activities was $6.8 million. We have incurred recurring net losses from operations and negative cash flows from operating activities since inception. On May 12, 2025, we raised gross proceeds of $1.5 million in cash and acquired $0.9 million in trading debt securities, before deducting placement agent fees and offering expenses of $0.4 million, in connection with the May 2025 PIPE Financing. Through September 30, 2025, we raised gross proceeds of $4 million, before deduction of commissions and offering expenses of $0.3 million, in connection with the ATM. See Note 11, Equity Offerings in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the financing events. 38 Table of Contents We expect operating losses and negative cash flows to continue for the foreseeable future unless our sales and gross profit increase sufficiently to cover our operating expenses. We expect our current operating expenses to remain relatively fixed for the near term, absent entering into a transformative strategic transaction. We believe that our current cash on hand of $377 thousand as of November 5, 2025 will not be sufficient to fund our current operations, and if we are unable to secure additional financing we will be unable to fund planned expenditures and meet obligations through the end of the fourth quarter. Further, we have outstanding short-term notes that will become due and payable within the next twelve months, including notes to related parties which come due in January of 2026, and in July of 2026. Therefore, even if we obtain financing in the fourth quarter, depending upon the amount of any financing we do obtain, we may continue to experience insufficient liquidity for the foreseeable future. We are currently evaluating potential means of raising cash, as described below, to fund our operations and to pay our debts as they come due. If we are unable to do so, we will be required to reduce our spending 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 described above and previously disclosed, the Company remains committed to the aggressive and creative pursuit of financing, despite great challenges to securing capital on our preferred terms. Any assets that are liquidated to meet our current urgent liquidity needs may produce proceeds that are less than the market or stated value of such assets and less than the proceeds that could have been obtained if they were liquidated in the ordinary course. Due to the challenging economic environment, we have explored and continue to explore a wide variety of possible capital-raising and strategic transactions, including but not limited to private equity offerings, registered issuances, credit facilities, and convertible debt, or sale of the QHS Notes, as well as other innovative and specialty finance strategies such as a crypto asset treasury policy or business combination. There is no guarantee that we will succeed in securing the financing or other strategic transaction needed to sustain the Company or that any such transaction will be on our preferred terms. As a result of these factors, we have 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 September 30, 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 Nine Months Ended September 30, 2025 and 2024 (in thousands) Nine Months Ended September 30, 2025 2024 Net cash provided by (used in): Operating activities $ (6,784 ) $ (6,407 ) Investing activities (51 ) (67 ) Financing activities 5,037 4,177 Net change in cash and cash equivalents $ (1,798 ) $ (2,297 ) Net cash used in operating activities During the nine months ended September 30, 2025, net cash used in operating activities of $6.8 million primarily related to the net loss of $11.8 million. This was partially offset by an increase in operating assets and liabilities of $0.8 million and non-cash adjustments related to change in fair value of royalties payable due to related parties of $2.1 million and acquired in-process research and development of $2.0 million. During the nine months ended September 30, 2024, net cash used in operating activities of $6.4 million primarily related to the net loss of $11.0 million, partially offset by an increase in operating assets and liabilities of $0.2 million and non-cash adjustments primarily consisting of change in fair value of royalties due to related parties of $2.8 million and depreciation and amortization of $1.6 million. 39 Table of Contents Net cash used in investing activities During the nine months ended September 30, 2025, net cash used in investing activities of $51 thousand consisted of purchases of property and equipment of $17 thousand and purchases of acquired in-process research and development of $34 thousand. During the nine months ended September 30, 2024, net cash used in investing activities of $67 thousand consisted of purchases of property and equipment. Net cash provided by financing activities During the nine months ended September 30, 2025, net cash provided by financing activities of $5.0 million consisted of net proceeds from issuance of common stock and other equity-classified instruments of $4.9 million, and proceeds from the issuance of notes payable of $0.3 million, partially offset by $0.2 million in payments on notes payable. During the nine months ended September 30, 2024, net cash provided by financing activities of $4.2 million primarily consisted of proceeds from issuance of common stock and other equity-classified instruments of $2.6 million and proceeds from the issuance of notes payable due to related parties of $1.5 million. 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. The preparation of these condensed 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 provisions for legal contingencies, income taxes, deferred income tax asset valuation allowances, royalties payable due to related parties, trading debt securities, 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. 40 Table of Contents 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 assets should be revised and adjusted, if necessary. 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 condensed consolidated statements of operations at that date. Trading Debt Securities The Company holds Level 3 trading debt securities that are measured at fair value with changes in fair value recognized in earnings. Because there is no observable market for these notes and their fair value depends on multiple, significant unobservable inputs, determining fair value requires significant judgment and could materially affect the Company’s results of operations. The fair value of the trading debt securities is determined using a probability weighted expected return model (“PWER model”) that values the trading debt securities based on the discounted cash flows of two potential settlement outcomes: (i) the trading debt securities will be converted into and settled in shares of common stock of QHSLab, Inc. and (ii) the trading debt securities’ principal and accrued interest will be paid. Aside from the probability of the two potential settlement outcomes, the fair value measurement incorporates several significant unobservable inputs, including the recovery rate, simulated conversion price, credit-risk adjusted discount rate, expected equity volatility, and expected term. 41 Table of Contents Royalties payable 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 current portion of royalties payable due to related parties and royalties payable due to related parties in the condensed consolidated balance sheets if it is payable within the next 12 months and under royalties payable due to related parties in the condensed consolidated balance sheets if it is payable 12 months after the balance sheet date. The royalties payable due to related parties are 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. The fair value measurement of royalties payable due to related parties includes significant unobservable inputs that are not supported by any market data. Royalties payable due to related parties equal 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. New Accounting Pronouncements See Note 2 in the condensed 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. 42 Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.