Catheter Precision, Inc. 10-K

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K for the period ended December 31, 2025 (this "Annual Report"). The following discussion and analysis of our financial condition and results of operations contain forward-looking statements that involve a number of risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include, but are not limited to, those set forth in Item 1A. Risk Factors of this Annual Report, many of which are outside of our control. All forward-looking statements included in this Annual Report are based on information available to us as of the time we file and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements. 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, we merged with the former Catheter Precision, Inc. ("Old Catheter”), a privately held Delaware corporation (the "Merger”), which became our wholly owned subsidiary. 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 in the field of cardiac electrophysiology ("EP"). On February 17, 2025, we 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 audited consolidated financial statements included elsewhere in this Annual 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 audited consolidated financial statements included elsewhere in this Annual 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. Unless Cardionomix can obtain its own dedicated financing, the Company does not intend to allocate capital to fund the clinical development of the acquired assets. On June 20, 2025, we formed a new subsidiary, KardioNav, Inc. ("KardioNav"), to pursue the advancement, development, and commercialization of certain intellectual property assigned to KardioNav. We transferred certain intellectual property related to the View into Ventricular Onset System ("VIVO" or "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. We own 57% of the subsidiary's issued and outstanding common stock, while Chelak owns 33% of the subsidiary’s issued and outstanding common stock. Our 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. KardioNav obtained its own financing in 2025. The Company does not intend to provide additional financial support to KardioNav. See Note 2, Summary of Significant Accounting Policies in the audited consolidated financial statements included elsewhere in this Annual Report. One of our two primary products is the 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. 53 Table of Contents 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. We 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. In February 2026, we entered into an Acquisition Purchase Agreement with SEG Jets LLC ("SEG Jets"), whereby we agreed to acquire 19.98% of the issued and outstanding shares of common stock of Fly Flyte, Inc. ("FLYTE") held by SEG Jets in exchange for 5,250 shares of our newly designated Series D Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, for an aggregate stated value of $5.3 million, subject to customary closing conditions and stockholder approval. In March 2026, we entered into a Securities Purchase Agreement with Creatd, Inc. ("Creatd"), whereby we acquired 80.02% of the remaining issued and outstanding shares of common stock of FLYTE and 100% of the membership interests of Ponderosa Air, LLC ("Ponderosa"), subject to closing conditions. As consideration for the acquired equity interests in FLYTE and Ponderosa, we agreed to pay $11.6 million as follows: (A) cash consideration $0.8 million due at closing, (B) $5.0 million in principal amount of a promissory note, and (C) 5,778 shares of Series D Convertible Preferred Stock for an aggregate stated value of $5.8 million. As a result of these transactions, we now own 100% of the issued and outstanding common stock of FLYTE common stock and 100% of the membership interests of Ponderosa. Our business strategy is to become a leading medical device company in the field of cardiac electrophysiology developing and selling electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias and reduce cost per procedure. We aim to establish VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias by reducing procedure time and patient complications and increasing procedural success. However, in order to attract capital to fund our operating losses while we pursue this strategy, we have also adopted a holding company structure within which we house and operate our FLYTE private aviation charter business which has the potential to quickly grow into a profitable subsidiary. FLYTE is a technology-enabled regional air mobility company operating a growing fleet of Cirrus Vision Jets. Focused on high frequency, short haul markets, FLYTE is providing a faster, safer, and more efficient alternative to commercial and existing private charter air travel. Flight operations are conducted through FLYTE’s wholly owned subsidiary, Ponderosa Air, LLC, an FAA certified Part 135 air carrier. With certified aircraft, active revenue generating operations and scalable fleet expansion underway, FLYTE is seeking to build a disciplined, asset backed aviation infrastructure designed to serve underserved regional markets. 54 Table of Contents Recent Developments PeriKard Asset Acquisition On January 14, 2025, we entered into a Membership Interest Purchase Agreement ("Agreement”) with Cardiofront, LLC (the "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 audited consolidated statements of operations for the year ended December 31, 2025. As of December 31, 2025 , we have not recognized a liability for the contingent royalty payments because they are currently not probable or reasonably estimable. On December 31, 2025, in connection with the second amendment of the Related Party Notes described in Note 7, Notes Payable, the Company sold the Perikard membership interests for de minimis proceeds to Mr. Jenkins. The disposal primarily related to the previously acquired patent for pericardial access technology. At the time of the disposal, we did not owe the Seller any royalty payments and our obligation to pay any royalty payments in the future terminated at the time of disposal. Because the patent was fully expensed as IPR&D at the time of acquisition and Perikard held no other assets or liabilities, no impairment or other charges were recognized in connection with the disposal. See Note 7, Notes Payable, in the audited consolidated financial statements included elsewhere in this Annual Report for additional information. . 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 audited consolidated statement of operations for year ended December 31, 2025 . The minority equity interest holders are presented as non-controlling interests in the accompanying audited consolidated balance sheets, statements of operations, and statements of stockholders’ equity as of and for the year ended December 31, 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 our 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 audited consolidated balance sheets. See Note 11, Equity Offerings in the audited consolidated financial statements included elsewhere in this Annual Report for additional information on the provisions for the Series L and Placement Agent Warrants. See Note 12, Preferred Stock, in the audited consolidated financial statements included elsewhere in this Annual 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 year ended December 31, 2025 , we issued 115,913 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 (the "ATM Agreement”) with Ladenburg. Based on the original prospectus supplement filed by us, 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, we filed a prospectus supplement increasing the aggregate amount available to be sold to $3.2 million under the ATM ("Shares"). On August 7, 2025, we 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 our 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 our Company. We have agreed to pay Ladenburg a commission equal to 3% of the aggregate gross proceeds from sale of its shares of common stock. As of December 31, 2025 , 887,852 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. On November 21, 2025, we filed a Current Report on Form 8-K announcing the termination of the ATM Agreement effective as of November 24, 2025. KardioNav On June 20, 2025, we formed KardioNav to pursue the advancement, development, and commercialization of certain intellectual property assigned to KardioNav. We transferred certain intellectual property related to the VIVO System to KardioNav, while Chelak 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 minority equity interest holders are presented as non-controlling interest in the accompanying audited consolidated balance sheet, statement of operations, and statement of stockholders’ equity included elsewhere in this Annual Report as of and for the year ended December 31, 2025 . See Note 2, Summary of Significant Accounting Policies in the audited consolidated financial statements included elsewhere in this Annual Report for additional information. Convertible Notes Payable On December 26, 2025, we issued an unsecured convertible notes payable with a principal amount of $102 thousand and a discount of $2 thousand to Boot Capital LLC for cash proceeds of $100 thousand. We further issued an unsecured convertible note payable with a principal amount of $204 thousand and a discount of $4 thousand to Vanquish Funding Group Inc. for cash proceeds of $200 thousand. The convertible notes payable have a maturity date of September 30, 2026 and stated interest rate of 10% per annum, which shall be payable when the principal amount is due. Any principal amount or interest that is not paid when due shall bear the default interest of 22% per annum. In accordance with the fair value option, the convertible notes payable were recorded at fair value in the accompanying consolidated balance sheets included elsewhere in this Annual Report. Changes in fair value of convertible notes payable along with interest expense are recorded under change in fair value of convertible notes payable in the accompanying consolidated statements of operations included elsewhere in this Annual Report. See Note 8, Notes Payable in the audited consolidated financial statements included elsewhere in this Annual Report for additional information. Modification of Related Party Notes On December 31, 2025, we entered into the second amendment of the Related Party Notes, which extended the maturity date of the notes payable to the Jenkins Family Charitable Institute to January 31, 2028, and the notes payable to FatBoy Capital, L.P. ("FatBoy") and Mr. Jenkins to January 31, 2029. As part of the second amendment, we issued 170,000 Series M Warrants to FatBoy and Mr. Jenkins, respectively, and transferred the Perikard membership interests to Mr. Jenkins for de minimis proceeds. All other terms and conditions remained unchanged. The second amendment was accounted for as a debt extinguishment since the amended terms and conditions were substantially different from prior terms and conditions. We derecognized the net carrying amount of the original Related Party Notes and recorded the amended Related Party Notes at fair value. Since the fair value of the amended Related Party Notes of $1.7 million was greater than the principal balance of $1.5 million, we recognized a premium of $0.2 million as of December 31, 2025. The difference between the reacquisition price, which is the sum of the fair values of the amended Related Party Notes, Perikard membership interests, and Series M Warrants, and the net carrying amount of the original Related Party Notes of $0.6 million was recorded as loss on debt extinguishment in the accompanying audited consolidated statements of operations included elsewhere in this Annual Report. See Note 8, Notes Payable in the audited consolidated financial statements included elsewhere in this Annual Report for additional information. Each Series M Warrant is exercisable for shares of the Company’s common stock at an exercise price of $1.56 per share. The Series M Warrants are not exercisable until Stockholder Approval is obtained, and expire 5.5 years thereafter. Each Series M Warrant is exercisable into one share of the Company's common stock and may be exercised on a cashless basis under certain circumstances. The exercise price of the Series M Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company's common stock. The Series M Warrants are callable by the Company for $0.01 per share if the volume-weighted average price of the Company's common stock for 20 consecutive trading days exceeds $1.50 per share and the Series M Warrants have not been exercised. Stockholder approval has not been obtained. The Company assessed the Series M Warrants and determined that they do not require liability classification pursuant to ASC 480. Furthermore, the Series M Warrants do not have any net cash settlement provisions that would preclude equity classification under ASC 815-40. Accordingly, the fair value of the Series M Warrants of $509 thousand was recorded as an increase to additional paid-in capital in the consolidated balance sheets. See Note 11, Equity Offerings in the audited consolidated financial statements included elsewhere in this Annual Report for additional information on the provisions for the Series M Warrants. Royalty Payable Exchange On December 31, 2025, we entered into the Series J Exchange Agreement ("Royalty Right Exchange") with Mr. Jenkins and FatBoy to exchange future and accrued royalty rights of $2.7 million for an aggregate of 9,490 shares of the Company's newly designated Series J Convertible Preferred Stock, par value $0.0001 per share and stated value of $1,000 per share. We derecognized $2.7 million of royalties payable due to related parties and recognized the fair value of the Series J Convertible Preferred Stock of $5.3 million in additional paid-in capital in the accompanying consolidated balance sheets included elsewhere in this Annual Report. The difference between the fair value of the Series J Convertible Preferred Stock and the fair value of the royalties payable due to related parties of $2.6 million was recorded as loss on debt extinguishment in the accompanying consolidated statements of operations included elsewhere in this Annual Report. See Note 12, Preferred Stock, in our audited consolidated financial statements included elsewhere in this Annual Report for additional information on the Series J Convertible Preferred Stock issued in connection with the Royalty Right Exchange. One of the third-party Noteholders remained a party to the royalty agreement and associated payable as of December 31, 2025. February 2026 Private Placement On February 6, 2026, we entered into a Securities Purchase Agreement with certain accredited investors for a private placement financing and issued an aggregate of (i) 392,608 shares of our common stock, par value $0.0001 per share, at a per share purchase price of $1.43 and (ii) 1,616.33 shares of newly designated Series C-1 Convertible Preferred Stock par value $0.0001 per share, with a stated value of $1,000 per share for gross proceeds of $2.2 million. The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock, par value $0.0001 per share, with stated values of $1,000 per share, under additional closings for aggregate gross proceeds of $1.6 million per closing. The additional closings are subject to certain closing conditions, including stockholder approval to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and to effect a reverse stock split (“Stockholder Approval”) and, solely with respect to the closing of the Series C-3 Convertible Preferred Stock, declaration of the effectiveness of the Registration Statement filed for the resale of the common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock. The investors also have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock, par value $0.0001 per share, with stated value of $1,000 per share in one or more closings. February 2026 Warrant Exercise and Series B Convertible Preferred Stock Conversion Inducement In February 2026, the Company agreed to lower the exercise price of existing warrants and the conversion price of the Series B Convertible Preferred Stock to $1.78 per share for certain holders as consideration for exercising the existing warrants and converting the Series B Convertible Preferred Stock, resulting in aggregate proceeds of $0.4 million. March 2026 Private Placement On March 9, 2026, we entered into an additional Securities Purchase Agreement with certain accredited investors for a private placement financing pursuant to which the investors agreed to purchase 1,853 shares of Series C-1 Convertible Preferred Stock, par value of $0.0001 per share and stated value of $1,000 per share, for aggregate gross proceeds of $1.9 million. The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock, par value $0.0001 per share, with stated values of $1,000 per share, under additional closings for aggregate gross proceeds of $1.9 million per closing. The additional closings are subject to closing conditions, including approval from our stockholders to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and, solely with respect to the closing for the Series C-3 Convertible Preferred Stock, effectiveness of the Registration Statement filed to register the resale of common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock. The investors also have the right, but not the obligation, to purchase up to an aggregate of $35.6 million of Series C-4 Convertible Preferred Stock, par value $0.0001 per share, with stated value of $1,000 per share in one or more closings. FLYTE Acquisition Refer to Overview and Note 18, Subsequent Events in our audited consolidated financial statements included elsewhere in this Annual Report for additional information. Components of our results of operations for the years ended December 31, 2025 and 2024 Revenues Our current activities primarily relate to the design, manufacture and sale of new and innovative medical technologies in the field of cardiac electrophysiology. Our two primary products are (i) the VIVO System and (ii) the LockeT device. The VIVO System provides 3D cardiac mapping to aid with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to electrophysiology studies. Customers also have the option to purchase software upgrades in advance at contract inception. We invoice the customer for VIVO System and related software upgrade services after physical possession and control of VIVO System has been transferred. Subsequent renewals for software upgrade services are invoiced at inception of the renewed term. The timing of payment for the corresponding invoices depends on the credit terms identified in each contract. We recognize revenues for VIVO System at the point in time that the product is delivered to the customer. We recognize revenues for software upgrade services evenly over time over the term of the contract. The software upgrade services revenues during the years ended December 31, 2025 and 2024 were not material. 55 Table of Contents 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 years ended December 31, 2025 and 2024 , approximately 20% and 34% of our sales were derived from customers outside the United States, respectively. Cost of revenues Cost of revenues for product sales consists primarily of costs of components, 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, professional services fees, including legal, audit and tax fees, insurance costs, general corporate expenses and facility-related expenses. Research and development expenses Research and development ("R&D") expenses are expensed as incurred and include the following: research grants paid to other parties; product development; cost of clinical studies to support new products and product enhancements, including expanded indications; supplies used for internal R&D and clinical activities; and cost of 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. Loss on impairment of intangible assets Loss on impairment of intangible assets consists of non-cash charges recognized when events or changes in circumstances indicate that the carrying amount of our long-lived intangible assets or related asset group may not be recoverable. Loss on debt extinguishment Loss on debt extinguishment consists of charges recognized when debt or other contractual obligations are settled, exchanged or otherwise extinguished and the reacquisition price exceeds the net carrying amount of the liability. Such losses may arise from amendments accounted for as extinguishments, exchanges of liabilities for equity instruments, or the transfer of other consideration in connection with the settlement of outstanding obligations. Results of operations for the years ended December 31, 2025 and 2024 The following table sets forth the results of our operations for the periods presented (in thousands): For the Year Ended December 31, 2025 2024 Change Revenue $ 819 $ 420 $ 399 Cost of revenues 63 42 21 Selling, general and administrative expenses 12,075 11,349 726 Research and development expenses 862 272 590 Acquired in-process research and development expenses 1,967 — 1,967 Loss on impairment of intangible assets 6,995 — 6,995 Change in fair value of royalties payable due to related parties 5,709 (2,239 ) 7,948 Loss on debt extinguishment (3,260 ) — (3,260 ) Net loss on trading debt securities (564 ) — (564 ) Other (expense) income, net (1) (247 ) (20 ) (227 ) Income tax provision (benefit) (1,810 ) 3,141 (4,951 ) (1) Constitutes the operating activities within other income (expense), net in the audited consolidated statements of operations, except for the change in fair value of royalties payable, loss on debt extinguishment, and net loss on trading debt securities that are presented separately in the table above. 56 Table of Contents Revenues The increase in revenues of approximately $399 thousand for the year ended December 31, 2025 as compared to the prior year was due to an increase of $408 thousand in LockeT sales and $3 thousand in licensing fees for VIVO software upgrade services, 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 prove the procedural efficiency, cost-effectiveness and improved patient experience from the use of LockeT devices compared with incumbent or competing closure devices to prospective new hospital customers. Accordingly, we have entered into long-term contracts with a number of these hospitals, which has resulted in an increase in initial and repeat customer orders as the LockeT devices are used and consumed in clinical procedures. The 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 the year ended December 31, 2025 . Cost of revenues The increase in cost of revenues of approximately $21 thousand for the year ended December 31, 2025 as compared to 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 year ended December 31, 2025 as compared to the prior year. Selling, general and administrative expenses The increase in selling, general and administrative expenses of approximately $0.7 million for the year ended December 31, 2025 as compared to the prior year was primarily due to an increase in salaries and benefits of $0.3 million, an increase in stock-based compensation expense of $0.3 million, and an increase in professional fees of $0.1 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 us 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 year ended December 31, 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 transactions completed during the year and an increase in the corresponding legal, accounting and audit fees. Research and development expenses The increase in research and development expenses of approximately $0.6 million for the year ended December 31, 2025 as compared to the prior year was primarily due to an increase in professional fees of $0.3 million and an increase in salaries and benefits of $0.3 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 was hired in January 2025. 57 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 year ended December 31, 2025 as compared the corresponding period in the prior year primarily relates to 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 audited consolidated statements of operations for the year ended December 31, 2025 . On May 5, 2025, we acquired certain assets primarily related to Cardionomic’s C PNS 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 audited consolidated statements of operations for the year ended December 31, 2025 . Loss on impairment of intangible assets During the year ended December 31, 2025, we evaluated long-lived assets for impairment and concluded that the carrying amount of the VIVO asset group was not recoverable. Based on the results of the impairment analysis, we recorded an impairment charge of approximately $7.0 million related to the VIVO intangible assets. We did not record a similar impairment charge in 2024. Change in fair value of royalties payable due to related parties The fair value of the royalties payable due to related parties is calculated using a discounted cash flow method. The change in fair value of royalties payable due to related parties decreased approximately $7.9 million for the year ended December 31, 2025 as compared to the corresponding period in the prior year. The decrease primarily reflects lower projected LockeT sales and a reduction in the discount rate used in the discounted cash flow model, which decreased from 22.5% in prior year to 19.5% in current year. Loss on debt extinguishment For the year ended December 31, 2025, we recorded an aggregate loss on debt extinguishment of $3.3 million. This primarily consisted of a $2.6 million loss related to the settlement of royalties payable due to related parties and a $0.6 million loss related to the modification of the Related Party Notes, which was treated as a debt extinguishment. Net loss on trading debt securities The increase in net loss on trading debt securities of $564 thousand for the year ended December 31, 2025 as compared to the prior year relates primarily to the sale of the QHSLab Notes. This loss relates to the disposition of QHSLab Notes, which were received as consideration for the Series B Convertible Preferred Stock and Series L Warrants issued on May 12, 2025. We did not hold or trade debt securities during the prior year. Other (expense) income, net The increase in other expense, net of approximately $0.2 million for the year ended December 31, 2025 as compared to the corresponding period in the prior year, primarily relates to an increase in interest expense related to the note payable issued by Cardionomix on May 5, 2025, the short-term note payables issued by KardioNav on July 11, 2025, and the full year of interest expense recorded for the related party notes that were issued in May 2024. Of these note payables, we only incurred interest expense in connection with the related party notes for half of the year of 2024. Income tax provision (benefit) We recorded an income tax benefit of $1.8 million for the year ended December 31, 2025 , as compared to an income tax provision of $3.1 million for the year ended December 31, 2024 This 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 December 31, 2025 , we had cash and cash equivalents of approximately $0.1 million and an accumulated deficit of approximately $309.5 million. For the year ended December 31, 2025 , net cash used from operating activities was approximately $8.3 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, before deducting placement agent fees and offering expenses of $0.4 million, in connection with the May 2025 PIPE Financing. Through December 31, 2025, we raised gross proceeds of $4.0 million, before deduction of commissions and offering expenses of $0.3 million, in connection with the ATM. On December 26, 2025, we issued a total of $0.3 million in unsecured convertible notes payable that will become due and payable on September 30, 2026. On December 31, 2025, we extended the maturity date of the notes payable to the Jenkins Family Charitable Institute to January 31, 2028, and the notes payable to FatBoy and Mr. Jenkins to January 31, 2029. Furthermore, on December 31, 2025, we fully settled the royalties payable due to Mr. Jenkins and FatBoy totaling $2.7 million through the issuance of Series J Convertible Preferred Stock. See Note 11, Equity Offerings and Note 7, Notes Payable in the audited consolidated financial statements included elsewhere in this Annual Report for additional information on the financing events. Subsequent to year end, we raised gross proceeds of $2.2 million and $1.9 million in connection with the February 2026 and March 2026 Private Placements, respectively. We also raised gross proceeds of $0.4 million through the induced exercise of certain existing warrants and conversion of the Series B Convertible Preferred Stock. In addition, as a result of the FLYTE Acquisition, we paid $0.8 million in cash at closing to Creatd and issued a promissory note with a principal amount of $5.0 million and an interest rate of 0% per annum to Creatd. 58 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 $548 thousand as of March 18, 2026 will not be sufficient to fund our current operations. Further, we have outstanding short-term notes that will become due and payable within the next twelve months, including the convertible notes payable that will be due in September of 2026, and the notes payable of variable interest entities due to related parties that will be due in July 2026. We expect the need to complete an additional financing sometime in the next 1 to 2 months. Because expected revenues are not adequate to fund our planned expenditures and anticipated operating costs and liabilities beyond such point, w e 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. 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, as well as other innovative and specialty finance strategies or business combination. There is no guarantee that we will succeed in securing the financing or other strategic transaction needed to sustain our company or that any such transaction will be on our preferred terms. As a result of these factors, management has concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year after the date of the audited consolidated financial statements for the year ended December 31, 2025 are issued. Our audited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Cash flows for the years ended December 31, 2025 and 2024 (in thousands) For the Year Ended December 31, 2025 2024 Net cash provided by (used in): Operating activities $ (8,296 ) $ (9,271 ) Investing activities 167 (67 ) Financing activities 5,344 8,646 Net change in cash and cash equivalents $ (2,785 ) $ (692 ) Net cash used in operating activities During the year ended December 31, 2025 , net cash used in operating activities of $8.3 million primarily consisted of a net loss of $17.7 million, an increase in deferred income tax benefit of $1.8 million, and change in fair value of royalties payable of $5.7 million, partially offset by non-cash adjustments related to loss on impairment of intangible assets of $7.0 million, depreciation and amortization expense of $2.1 million, acquired in-process research and development of $2.0 million, net loss on trading debt securities of $0.6 million, loss on debt extinguishment of $3.3 million, and stock-based compensation expense of $0.3 million and change in operating assets and liabilities of $1.6 million. During the year ended December 31, 2024 , net cash used in operating activities of $9.3 million primarily consisted of a net loss of $16.6 million, partially offset by non-cash adjustments related to depreciation and amortization of $2.1 million, an increase in deferred income tax provision of $3.1 million, and change in fair value of royalties payable of $2.2 million. 59 Table of Contents Net cash provided by (used in) investing activities During the year ended December 31, 2025 , net cash provided by investing activities of $167 thousand consisted of proceeds from the sale of trading debt securities of $300 thousand, partially offset by purchases of property and equipment of $17 thousand and purchases of acquired in-process research and development of $116 thousand. During the year ended December 31, 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 year ended December 31, 2025 , net cash provided by financing activities of $5.3 million primarily consisted of net cash proceeds from the issuance of common stock and warrants of $4.9 million, proceeds from the issuance of notes payable due to related parties of $0.3 million, proceeds from the issuance of convertible notes payable of $0.3 million, partially offset by $0.2 million in payments on notes payable. During the year ended December 31, 2024 , net cash provided by financing activities of $8.6 million primarily consisted of net cash proceeds from the issuance of common stock and warrants of $7.3 million, the issuance of notes payable to related parties of $1.5 million, and the exercise of warrants of $1.2 million, partially offset by the payment of offering costs of $1.4 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. Critical Accounting Estimates The information set forth below relates to our critical accounting policies and estimates. The discussion and analysis of our financial position and results of operations is based on our audited consolidated financial statements included elsewhere in this Annual Report, which have been prepared in accordance with U.S. GAAP. The preparation of these audited 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, share based compensation, evaluation of impairment of long-lived assets, valuation of long-lived assets and their associated estimated useful lives, trading debt securities, and convertible notes payable. 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. 60 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 We periodically review our 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 our audited consolidated statements of operations at that date. 61 Table of Contents Royalties payable We are obligated to pay royalties related to the sales of LockeT and AMIGO System under various royalty agreements executed by Old Catheter. We recognize 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 audited consolidated balance sheets. We recognize 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 audited consolidated balance sheets if it is payable within the next 12 months and under royalties payable due to related parties in the audited consolidated balance sheets if it is payable 12 months after the balance sheet date. Changes in fair value of royalties payable due to related parties are recorded on the audited 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. We apply 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. Convertible notes payable We elected to measure the Convertible Notes Payable using the fair value option under ASC 825. The fair value of the Convertible Notes Payable is remeasured at each reporting date using a probability weighted expected return model (“PWER model”). The PWER model values the convertible notes payable based on the discounted cash flows of three potential settlement outcomes: (i) the convertible notes payable will be converted into and settled in shares of common stock, (ii) the convertible notes payable’s principal and accrued interest will be paid in cash, and (iii) a dissolution scenario wherein the investor receives a partial payment based on a recovery rate. The conversion outcome incorporates a Monte Carlo simulation to estimate our common stock price at the expected conversion date and the number of shares issuable based on the variable conversion price. Aside from the probability of the three potential settlement outcomes, the fair value measurement incorporates several significant unobservable inputs, including the recovery rate, implied equity volatility, expected term assumptions, simulated conversion price, and credit-risk adjusted discount rate. New Accounting Pronouncements See Note 2 in the audited consolidated financial statements included elsewhere in this Annual 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. 62 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our financial statements and supplementary data required by this item are set forth at the pages indicated in Item 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no such disagreements or events during the specified periods.