Catheter Precision, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Executive Chairman of the Board and Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of December 31, 2023, including the disclosure controls and procedures of Old Catheter. Our objective in designing our disclosure controls and procedures is that they provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon this evaluation, due to the existence of the material weaknesses found in our internal controls over financial reporting described below, our Chief Executive Officer and Interim Chief Financial Officer concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level. As disclosed in our Form 10-Qs for the quarters ended June 30, 2023 and September 30, 2023, for the reasons set forth therein, our Chief Executive Officer and then-Chief Financial Officer concluded that, as of March 31, 2023, June 30, 2023, and September 30, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level, excluding at that time the disclosure controls and procedures of Old Catheter. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. In preparation of our financial statements for the period covered by this report, we identified material weaknesses in internal control over financial reporting related to our control environment that existed as of December 31, 2023, as described below. Specifically, we identified material weaknesses with respect to (1) the lack of segregation of duties, (2) the lack of designed and operating review controls with respect to oversight of the financial reporting process, (3) errors with respect to the review of work performed by service providers, (4) errors in connection with accounting for the royalty obligation acquired in the merger with Old Catheter, (5) use of an incorrect discount rate in calculating the fair value of the royalty obligation, and (6) timing of revenue recognition. Notwithstanding the identified material weaknesses, management believes that the Financial Statements and related financial information included in this Annual Report for the year ended December 31, 2023 fairly present, in all material respects, our balance sheets, statements of operations, shareholders’ equity and cash flows as of and for the periods presented. Remediation Plan Management is in the process of developing a remediation plan. The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. The Company will monitor the effectiveness of its remediation plans and will make changes management determines to be appropriate. Anticipated remediation measures include continuing assessment of the need to expand the Company’s current accounting and financial reporting teams to include individuals with requisite experience to meet the requirements associated with the increasing operations of a publicly traded company, establishment of policies and procedures to ensure full review and sign offs with respect to the inputs sent to third-party service providers as well as the reports and documentation upon the completion of their work prior to any adjustments being made to the financial statements, establishment of policies and procedures related to the review of all contracts the Company enters into to ensure any terms or conditions are evaluated for any accounting required or accounting treatment or disclosure, and establishment of policies and procedures to review the inputs to royalty liability and other fair value calculations as well as the outputs impacting the balance at each reporting period. We have taken the following steps associated with material weaknesses related to Old Catheter: (1) for segregation of duties, we had hired additional employees, including a Chief Financial Officer; however, we are now seeking a new, permanent Chief Financial Officer, (2) we have begun recording revenue when the product is received by the customer, and (3) as a result of the Merger, Old Catheter no longer has derivative liabilities, so a previously identified material weakness related to this is no longer applicable to our current business. 69 Table of Contents Changes in Internal Control over Financial Reporting There have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than those related to Old Catheter and the Merger with Old Catheter, which include changes necessitated by the change in the Company’s line of business and the remediation of the material weaknesses with respect to Old Catheter as described above. Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Registered Public Accounting Firm Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting, including Old Catheter’s internal control over financial reporting, based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management has concluded that its internal control over financial reporting was not effective as of December 31, 2023 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, due to the material weaknesses discussed above at “Evaluation of Disclosure Controls and Procedures.” Our independent registered public accounting firm, WithumSmith+Brown, PC ("Withum"), is not required to and has not issued an attestation report as of December 31, 2023 because we are not an “accelerated filer” or a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act. Inherent Limitations on Effectiveness of Controls Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 70 Table of Contents ITEM 9B. OTHER INFORMATION No director or officer (as defined in Rule 16a–1(f) under the Exchange Act) of the Company adopted or terminated (i) any contract, instruction or written plan for the purchase or sale of securities of the registrant intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) under the Exchange Act; and/or (ii) any “non-Rule 10b5–1 trading arrangement” as defined in paragraph (c) of Item 408 of Regulation S-K, during the quarter ended December 31, 2023. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Composition of the Board Our business and affairs are managed under the direction of our board of directors, or the Board, which currently consists of four members, three of whom are “independent” under NYSE American listing standards. Our bylaws provide that the number of directors will be fixed from time to time by resolution of the Board. All directors hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification or removal. We have divided the terms of office of the directors into three classes with staggered three year terms: Class I, whose term expires at the 2025 Annual Meeting of Stockholders; Class II, whose term expires at the 2026 Annual Meeting of Stockholders; and Class III, whose term expires at the 2024 Annual Meeting of Stockholders. Information about the Board of Directors The following table sets forth the names, ages as of March 12, 2024, and certain other information regarding each member of the Board. The following information has been furnished to us by the directors. Name Class Age Position Director Since Current Term Expires David A. Jenkins II 66 Executive Chairman of the Board of Directors and Chief Executive Officer 2023 2026 Martin Colombatto I 65 Director 2017 2025 James Caruso III 63 Director 2023 2024 John P. Francis III 58 Director 2024 2024 David A. Jenkins became Executive Chairman of the Board in January 2023. He became Interim Chief Executive Officer in April 2023 and was named Chief Executive Officer in January 2024. He has spent most of his career as an entrepreneur in the medical device industry, and has established numerous companies including Old Catheter, where he served as the CEO and as Chairman of Old Catheter’s Board. He has been Chairman of the Board of Old Catheter since Catheter’s inception in 2006 and has served as CEO of Old Catheter since December 2020. His prior experience includes having served as Chairman and CEO of Arrhythmia Research and overseeing the introduction to the market of Cardiolab, the first dual monitor, 32 channel electrophysiology recording system. This technology was later acquired by General Electric and continues to be sold into the market place today. Another of Mr. Jenkins’ companies, EP MedSystems, Inc., was sold to St. Jude Medical, Inc., now part of Abbott, for approximately $93 million in 2008. Mr. Jenkins also founded and served as the CEO of Transneuronix, Inc., a maker of implantable stimulators for the treatment of weight loss, which was later sold to Medtronic for $267 million in 2005. Mr. Jenkins holds a degree in accounting from the University of Kansas, and a master’s degree in business from the University of Texas, Austin. He began his career in public accounting with Coopers and Lybrand. We believe that Mr. Jenkins is qualified to serve as a director because of his extensive experience in the medical device industry. 71 Table of Contents Martin Colombatto has served as a director of the Company since January 2017. Mr. Colombatto has served as a Venture and Industry Partner of Seven Peaks Ventures LLP, a venture capital fund based in Bend, OR, since January 2016. From December 2013 to August 2014, Mr. Colombatto served as a director of PLX Technology, Inc., a technology company. Mr. Colombatto has also served as the Chief Executive Officer and President of Staccato Communications, Inc., an Ultra-Wideband semiconductor company, from January 2006 to March 2009 and as Executive Chairman of Staccato Communications, Inc., from January 2006 to September 2010. Prior to joining Staccato, Mr. Colombatto served as Vice President and General Manager of the Networking Business unit of Broadcom Corp., a broadband communication semiconductor company, from July 1996 to July 2002. Mr. Colombatto was also previously employed by LSI Logic, an application specific semiconductor company, from August 1987 to July 1996. Mr. Colombatto also previously held engineering positions at Reliance Electric, a production automation and control company, from August 1985 to June 1987 and Texas Instruments, an electronics company, from June 1982 to April 1985. Mr. Colombatto holds a Bachelor of Science degree in Electronic Engineering Technology from California State Polytechnic University, Pomona. We believe that Mr. Colombatto is qualified to serve as a member of our board of directors due to his extensive management experience and familiarity with our business and strategy. James Caruso has held senior level financial positions in both public and private companies for more than 40 years, including serving as Chief Financial Officer at several publicly traded and privately held medical device companies. He has managed all financial aspects of businesses and is proficient in SEC reporting and compliance requirements. Mr. Caruso also has extensive operational experience and has led post-acquisition business integration activities on several occasions. Mr. Caruso served as Chief Financial Officer of Catheter Precision from 2010 through 2016. Mr. Caruso also served as Chief Financial Officer of EP MedSystems, Inc. (NASDAQ:EPMD), a company focused on cardiac electrophysiology that was acquired by St Jude Medical in 2008; Hi-Tronics Designs, Inc., a privately held medical device design and manufacturing company that was acquired by Advanced Neuromodulation Systems, Inc. in 2001; and Micron Products, Inc., a publicly traded medical device manufacturing company that was acquired by Arrhythmia Research Technology in 1991. Mr. Caruso spent five years in the audit practice at Deloitte (formerly Deloitte & Touche). Mr. Caruso received his Bachelor of Science in Business Administration from Rutgers University and an MBA from Fordham University and is a Certified Public Accountant. We believe that Mr. Caruso is qualified to serve as a director because of his senior level financial experience with public and private companies. John P. Francis has served as Managing Member of Francis Capital Management, LLC, an investment management firm specializing in small capitalization equities, since 2000. Mr. Francis has more than 20 years of experience in investment management, finance and accounting. Mr. Francis has extensive experience investing in small cap medical device companies. Mr. Francis earned his bachelor's degree in economics from UCLA and MBA from the UCLA Anderson School of Management. Mr. Francis' qualifications to serve as a director include his financial, business and accounting experience. Mr. Francis is a Chartered Financial Analyst and a Certified Public Accountant (inactive). Executive Officers David A Jenkins became Executive Chairman of the Board in January 2023. He became Interim Chief Executive Officer in April 2023 and was named Chief Executive Officer in January 2024. His biographical information is set forth above at “Information About the Board of Directors.” Margrit Thomassen , age 54, became interim Chief Financial Officer and Secretary as of January 2, 2024. Ms. Thomassen has served as Controller of the Company since the merger with Old Catheter on January 9, 2023. From 2005 until 2023 she worked as Chief Financial Officer of SeaCap Management LLC, an affiliate of Mr. Jenkins, on various investment opportunities handling accounting, tax, management and human resources tasks. In 2021, she assumed the role of Controller at Old Catheter. 72 Table of Contents Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes of ownership on Forms 3, 4 and 5 with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms, and written representations that we have received from certain reporting persons that they filed all required reports, we believe that all of our officers, directors and greater than 10% stockholders complied with all Section 16(a) filing requirements applicable to them with respect to transactions during 2023, other than one late Form 4 filed by Susanne Meline, who served as a director during 2023, with respect to one transaction. Audit Committee The members of our Audit Committee are John Francis and James Caruso. Mr. Caruso serves as the chairperson of our Audit Committee. The Board has determined that each member of the Audit Committee is an independent director under the NYSE American listing rules, satisfies the additional independence criteria for audit committee members and satisfies the requirements for financial literacy under the NYSE American listing rules and Rule 10A-3 of the Exchange Act, as applicable. The Board has also determined that Mr. Caruso qualifies as an audit committee financial expert within the meaning of the applicable rules and regulations of the SEC and satisfies the financial sophistication requirements of the NYSE American listing rules. Corporate Governance Principles and Code of Ethics and Conduct The Board has adopted corporate governance principles. These principles address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. In addition, the Board has adopted a written code of ethics and conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our corporate governance principles and code of ethics and conduct are available on our website, www.catheterprecision.com , under the Investor Relations tab under “Governance”, then “Governance Documents.” If the Board makes any substantive amendments to, or grants any waivers from, the code of ethics and conduct for any officer or director, it will disclose the nature of such amendment or waiver on the Company’s website. ITEM 11. EXECUTIVE COMPENSATION Director Compensation With respect to 2023, the compensation committee and the Board did not retain a compensation consultant in connection with determining compensation of non-employee directors. Following the merger with Old Catheter in January 2023, the Board set 2023 compensation at an annual cash retainer of $50,000. In January 2024, the compensation committee recommended, and the Board approved, 2024 compensation to all non-employee directors consisting of a cash retainer of $50,000 and an award of non-qualified stock options to purchase 25,000 shares of Company common stock to each non-employee director. Options were granted on January 8, 2024, have a purchase price of $0.40 per share, a 10-year term, and vest quarterly over three years. Retainer cash payments will be paid in cash on or about the last day of each fiscal quarter of the Company in arrears to each non-employee director. We also reimburse our non-employee directors for reasonable, customary and documented travel expenses to attend meetings of our board of directors and committees of our board of directors. Our non-employee directors remain eligible to receive equity awards and cash or other compensation outside of the compensation described above, as may be provided from time to time at the discretion of our Board of Directors. No such awards or payments were made in 2023. 73 Table of Contents 2023 Director Compensation Table The following table sets forth information regarding compensation earned or paid to our non-employee directors during the year ended December 31, 2023: Fees Earned or Paid in Cash ($) Option Awards ($)(1) Total ($) Martin Colombatto (2) 50,000 — 50,000 James Caruso 50,000 — 50,000 Susanne Meline 50,000 — 50,000 (1) No option awards were granted to the directors during the year ended December 31, 2023. (2) Mr. Colombatto held vested options to purchase 73 shares of Company common stock as of December 31, 2023. See Executive Compensation for information about the compensation of Mr. David Jenkins, a director who is also an executive officer, and Mr. Will McGuire, a former director who was also an executive officer during a portion of 2023. Processes and Procedures for Executive Compensation The Compensation Committee assists the Board in discharging the Board’s responsibilities relating to oversight of the compensation of the chief executive officer and other executive officers, including reviewing and making recommendations to the Board with respect to the compensation, plans, policies and programs for the chief executive officer and other executive officers and administering the equity compensation plans for executive officers and employees. The Compensation Committee annually reviews the compensation, plans, policies and programs for the chief executive officer and other executive officers. In connection therewith, the Compensation Committee considers, among other things, each executive officer’s performance in light of established individual and corporate goals and objectives and the recommendations of our chief executive officer. In particular, the Compensation Committee considers the recommendations of the chief executive officer when reviewing base salary and incentive performance compensation levels of the executive officers and when setting specific individual and corporate performance targets under the annual incentive bonus plan for the executive officers. While the chief executive officer provides input on his compensation, he does not participate in compensation committee or Board deliberations regarding his own compensation. The Compensation Committee may delegate its authority to a subcommittee, but it may not delegate any power or authority required by agreement, law, regulation or listing standard to be exercised by the Compensation Committee as a whole. Named Executive Officers The named executive officers for 2023 (“NEOs”), which consist of our principal executive officer and our former Chief Financial Officer, who were our only executive officers as of December 31, 2023, as well as our former Chief Executive Officer, who would have been one of our next two most highly compensated executive officers but for the fact that he was not serving as an executive officer as of December 31, 2023, were as follows: · David A. Jenkins, Executive Chairman and Interim Chief Executive Officer; · Steve Passey, former Chief Financial Officer; and · Jonathan Will McGuire, former Chief Executive Officer and Secretary. Mr. Jenkins was appointed Executive Chairman upon effectiveness of the Merger on January 9, 2023. Mr. McGuire served as Chief Executive Officer until April 28, 2023. Mr. Jenkins was appointed interim Chief Executive Officer beginning April 28, 2023, and Chief Executive Officer beginning January 2, 2024. Mr. Passey served as Chief Financial Officer from April 1, 2023, through December 31, 2023. 74 Table of Contents Summary Compensation Table The following table provides information regarding the compensation of the NEOs for 2023 and 2022, as applicable: Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) David A. Jenkins 2023 300,000 300,000 Executive Chairman and Interim Chief Executive Officer Jonathan Will McGuire 2023 173,077 1,750,000 (1) 1,923,077 Former Chief Executive Officer and Secretary 2022 500,000 — — — — 43,953 (2) 543,953 Steve Passey 2023 189,664 189,664 Former Chief Financial Officer (1) represents severance pay that Mr. McGuire became entitled to upon his resignation, which was effective April 28, 2023, and which was paid in May 2023. (2) Amounts include Company matching contributions to 401(k) plan; taxable amounts from vested stock awards; and amounts paid for a supplemental health insurance plan. Executive Employment Agreements and Arrangements David A. Jenkins In January 2023, we entered into an oral employment agreement with David A. Jenkins, Chairman of the Board. In accordance with the terms of Mr. Jenkins’ employment agreement, he is entitled to annual compensation of $300,000. Jonathan Will McGuire The Company entered into an offer letter with Mr. McGuire dated March 9, 2020 which provided for at-will employment. The offer letter provided for an initial base salary of $500,000 and eligibility annually for a target cash bonus of 100% of his annual base salary, based on achieving performance objectives established by our board of directors or a committee of our board of directors. Mr. McGuire was also entitled to certain severance benefits and change in control payments, as more fully described in Mr. McGuire’s Change in Control and Severance Agreement below. Steve Passey During his employment with the Company, Mr. Passey received an annual salary of $250,000. He was also eligible to receive bonuses and equity awards at the discretion of the Compensation Committee. No such bonuses or awards were awarded. Mr. McGuire’s Change in Control and Severance Agreement The Company entered into a change in control and severance agreement with Mr. McGuire on March 30, 2020. The agreement provided for certain severance benefits, including the change in control payments described below, if the termination was by the Company without cause, or by Mr. McGuire for good reason, as such terms are defined in the agreement. If such termination occurred within a certain Change in Control Period, the change in control payments described below became payable. In January 2023, the agreement was amended to provide that the Change in Control Period would begin three months before a Change in Control, including the Merger, and end 24 months following such event. 75 Table of Contents Prior to an April 2023 amendment, if the termination described above occurred within the Change in Control Period, Mr. McGuire’s became entitled to the following: · a lump-sum payment equal to 24 months of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for good reason based on a material reduction in base salary, then as in effect immediately prior to the reduction) or if greater, at the level in effect immediately prior to the change in control); · a lump-sum payment equal to 150% of the executive officer’s target annual bonus as in effect for the fiscal year in which such termination occurs; · payment of premiums for coverage under COBRA for the executive officer and the named executive officer’s eligible dependents, if any, for up to 24 months, or taxable monthly payments for the equivalent period in the event payment of the COBRA premiums would violate or be subject to an excise tax under applicable law; and · 100% accelerated vesting and exercisability of all outstanding equity awards and, in the case of an equity award with performance-based vesting, all performance goals and other vesting criteria generally will be deemed achieved at target. The agreement provided that if any of the amounts provided for above or otherwise payable to Mr. McGuire would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax, he would be entitled to receive either full payment of benefits under the change in control or severance agreement or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever resulted in the greater amount of after-tax benefits to the executive officer. The change in control and severance agreement did not require us to provide any tax gross-up payments. The agreement was amended in April 2023 to clarify that Mr. McGuire’s severance payment would be based on his 2022 salary and bonus target, and that he would not be entitled to COBRA benefits. Mr. McGuire resigned for “good reason” as defined in the agreement, effective April 28, 2023. Upon his resignation, he became entitled to receive a payment of approximately $1.75 million under the agreement, which amount was paid in May 2023. Outstanding Equity Awards at 2023 Fiscal Year-End As of December 31, 2023, none of the NEOs named above held unexercised stock options, unvested stock awards, or any unearned and unvested shares, units or other rights awarded under equity incentive plans. All of Mr. McGuire’s unvested awards vested upon his resignation in April 2023, and his stock options became no longer exercisable three months following his resignation. Ms. Thomassen held options to purchase Company stock on December 31, 2023, which were received pursuant to the Merger, as described in Item 13 below. Perquisites, Health, Welfare and Retirement Benefits Our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life, disability and accidental death and dismemberment insurance plans, in each case on the same basis as all of our other employees. We generally do not provide perquisites or personal benefits to our named executive officers, except in limited circumstances . Our board of directors may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests. 401(k) Savings Plan Prior to the Merger, the Company maintained a tax-qualified retirement plan that provided eligible employees, including named executive officers, with an opportunity to save for retirement on a tax advantaged basis. All participants’ interests in their deferrals were 100% vested when contributed. Pre-tax and after-tax contributions were allocated to each participant’s individual account and were then invested in selected investment alternatives according to the participant’s directions. The Company, in its sole discretion, could make certain contributions to the plan. The 401(k) plan was intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions were not taxable to the employees until distributed from the 401(k) plan, and all contributions, if any, were deductible by the Company when made. As a result of the Merger, the Company terminated the 401(k) Savings Plan and liquidated all assets in March 2023. 76 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 12, 2024 by: · each person, or group of affiliated persons, who we know to beneficially own more than 5% of our common stock; · each of our named executive officers; · each of our directors; and · all of our executive officers and directors as a group. The percentage ownership information shown in the table is based on an aggregate of 7,573,403 shares of our common stock outstanding as of March 12, 2024. We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to: (i) the exercise of stock options that are either immediately exercisable or exercisable on or before May 11,2024, which is 60 days after March 12, 2024 and (ii) outstanding warrants to purchase common stock held by that person that are either immediately exercisable or exercisable on or before May 11, 2024, which is 60 days after March 12, 2024. These shares are deemed to be outstanding and beneficially owned by the person holding those options and warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise noted below, the address of each of the individuals and entities named in the table below is c/o Catheter Precision, Inc., 1670 Highway 160 West, Suite 205, Fort Mill, South Carolina 29708. Beneficial ownership representing less than 1% is denoted with an asterisk (*). Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws. Number of Shares of Common Stock Beneficially Owned Percentage of Common Stock Beneficially Owned 5% Stockholders: Armistice Capital Master Fund Ltd. (1) 752,874 9.99 % Directors and Named Executive Officers: Jonathan Will McGuire (2) 504 * David A. Jenkins (3) 1,044,087 13.79 % Steven K. Passey — — James J. Caruso (4) 3,862 * Martin Colombatto (5) 2,773 * John P. Francis (6) 6,242 * All directors and executive officers as a group (5 persons) (2)(3)(4)(5)(6)(7) 1,074,232 14.14 % (1) The number of shares presented as beneficially owned by shareholder was obtained from Schedule 13G filed by the shareholder on February 14, 2024 and represents shares issuable upon conversion of Series A Preferred Stock. The precise number of shares beneficially owned by the shareholder depends upon the operation of certain beneficial ownership blockers and the number of shares outstanding, and therefore may be greater or less than the number presented from time to time. The table does not include other derivative securities that are not currently exercisable due to beneficial ownership blockers. Address of stockholder is 510 Madison Avenue, 7th Floor, New York, NY 10022. 77 Table of Contents (2) Mr. McGuire resigned as an officer, director and employee of the Company effective April 28, 2023. (3) Includes (i) 2,264 shares held by a family charitable trust of which Mr. Jenkins is the trustee; (ii) 2,264 shares held by a charitable remainder unitrust of which Mr. Jenkins’ wife is the trustee; and (iii) 709,703 shares held by a partnership of which Mr. Jenkins is the manager member of the managing partner. Excludes 235,320 shares held by certain adult immediate family members of Mr. Jenkins. Does not include 8,190.261 shares of Series X Preferred Stock held by Mr. Jenkins and his affiliates which are convertible into 8,190,261 shares of common stock but which are subject to certain beneficial ownership blockers and which may not be converted, at the earliest, until July 9, 2024. Also does not include 1,049.024 shares of Series X Preferred Stock held, in the aggregate, by certain adult immediate family members of Mr. Jenkins and which are convertible into 1,049,024 shares of common stock, but which are subject to certain beneficial ownership blockers and which may not be converted, at the earliest, until July 9, 2024. Also does not include exercisable options to purchase 144,169 shares of common stock and unvested options to purchase 25,000 shares of common stock held by Missiaen Huck, the non-executive chief operating officer of Catheter and Mr. Jenkins’s adult daughter. (4) Does not include 7.932 shares of Series X Preferred Stock held by Mr. Caruso which are convertible into 7,932 shares of common stock but which are subject to certain beneficial ownership blockers and which may not be converted, at the earliest, until July 9, 2024. Includes currently exercisable options to purchase 2,083 shares of common stock. Does not include unvested options to purchase 22,917 shares of common stock. (5) Includes (i) 73 shares of common stock subject to options exercisable within 60 days of March 12, 2024, and (ii) 30 shares held of record by M. Colombatto Trust, of which Mr. Colombatto serves as trustee, and (iii) exercisable options to purchase 2,083 shares of common stock. Does not include unvested options to purchase 22,917 shares of common stock. (6) Includes (i) 1,548 shares of common stock subject to warrants exercisable within 60 days of March 12, 2024 held of record by Catalysis Partners (CP), (ii) exercisable options to purchase 2,083 shares of common stock, and (iii) 36 shares held by his spouse. Does not include unvested options to purchase 22,917 shares of common stock. Mr. Francis has an investment interest in CP and, together with his spouse, owns a controlling interest in Francis Capital Management LLC, which also has an investment interest in CP and serves as both its Managing Member and Investment Manager. Mr. Francis disclaims beneficial interest of these securities except to the extent of his pecuniary interest therein. Does not include 11.481 shares of Series X Preferred Stock held by a retirement fund for the benefit of Mr. Francis which are convertible into 11,481 shares of common stock but which are subject to certain beneficial ownership blockers and which may not be converted, at the earliest, until July 9, 2024. (7) Includes 16,764 shares of common stock underlying vested stock options held by Margrit Thomassen, the Company’s interim Chief Financial Officer and Secretary; excludes unvested options to purchase 25,000 shares of common stock held by Ms. Thomassen. 78 Table of Contents EQUITY COMPENSATION PLAN INFORMATION Information as of December 31, 2023, regarding the Company’s equity compensation plans is summarized in the following table: Number of Securities to be Issued Upon Exercise of Outstanding Options and Restricted Stock Units Weighted-Average Exercise Price of Outstanding Options (1) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders (2) 73 $ 17,161.30 502,408 Equity compensation plans not approved by security holders (3) 214,579 $ .63 0 Total 214,652 $ 6.47 502,408 (1) The weighted average exercise price is based solely on outstanding options. (2) Outstanding options were issued under the Company’s 2018 Equity Incentive Plan (as amended, the “2018 Plan”). The number of securities remaining available includes both the 2018 Plan and the 2023 Equity Incentive Plan (the “2023 Plan”). Excludes 54,678 shares which become available on March 1, 2024, and additional shares which will become available in future quarters, pursuant to an adjustment feature under the 2023 Plan. Under the adjustment features, the number of shares available for issuance under the 2023 Plan increases on the first day of each fiscal quarter (each, an “Adjustment Date”) by an amount equal to the lesser of: (i) 10% of the number equal to the number of shares of common stock outstanding on the applicable Adjustment Date less the number of shares of Common Stock outstanding at the beginning of the fiscal quarter immediately preceding the Adjustment Date, but if such number is a negative number, then the increase will be zero; or (ii) such lesser number of Shares as may be determined by the Board. (3) Represents Old Catheter options assumed in connection with the January 9, 2023 acquisition of Old Catheter. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related Person Transactions Pursuant to SEC rules, a “transaction” with a related party includes any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company was or is a participant and the related person had or will have a direct or indirect material interest where the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years. Accordingly, the applicable threshold for us is $120,000. Since January 1, 2022, we have engaged in the following transactions in which our executive officers, directors, promoters or beneficial owners of more than 5% of our common stock had or will have a direct or indirect material interest, other than compensation arrangements which are described under “ Executive Compensation .” We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties. Employment and Related Agreements We currently do not have written employment agreements with our executive officers. For information about our employment agreements with our Named Executive Officers, who are former employees, refer to “ Executive Compensation—Executive Employment Agreements and Arrangements .” In January 2023, we entered into an oral employment agreement with Missiaen Huck, Mr. David Jenkins’ adult daughter. Ms. Huck serves as the non-executive chief operating officer of Catheter and receives annual compensation of $165,000. In January 2024, Ms. Huck received a grant of options to purchase 25,000 shares of Company common stock which have an exercise price of $0.40 per share, vest ratably over five years and have a term of 10 years. As noted below, Ms. Huck also holds options to purchase an additional 144,169 shares of Company common stock which were originally issued by Old Catheter and assumed in the Merger. 79 Table of Contents Margrit Thomassen became interim Chief Financial Officer and Secretary in January 2024. She joined the Company as controller in January 2023, in connection with the Merger with Old Catheter. Ms. Thomassen’s annual salary for both 2023 and 2024 is $144,000. In January 2024, Ms. Thomassen received a grant of options to purchase 25,000 shares of Company common stock which have an exercise price of $0.40 per share, vest ratably over five years and have a term of 10 years. As noted below, Ms. Thomassen also holds options to purchase an additional 16,764 shares of Company common stock which were originally issued by Old Catheter and assumed in the Merger. Merger-Related Transactions Mr. Jenkins and his affiliates held approximately $25.1 million of Old Catheter’s Convertible Promissory Notes, or the Notes, that were converted in the Old Catheter merger into 7,856.251 shares of Series X Preferred Stock. Upon consummation of the merger, each such Noteholder received, in exchange for discharge of the principal of his or its Notes, a number of shares of our Series X Preferred Stock representing a potential right to convert into our common stock in an amount equal to one common share for each $3.20 of principal amount. In consideration for forgiving the interest accrued but remaining unpaid under the Notes in an aggregate amount of approximately $13.9 million, Mr. Jenkins and his affiliates also received royalties equal to 11.77% of the net sales, if any, of the LockeT device, commencing upon the first commercial sale and through December 31, 2035. In addition to the shares described above that were issued in connection with the Notes, Mr. Jenkins and his affiliates received 1,325.838 shares of Series X Preferred Stock in the merger, and Mr. Jenkins’ adult children received 1,284.344 shares of Series X Preferred Stock in the merger, all in exchange for their equity interests in Old Catheter in accordance with the merger exchange ratio. Additional, noninterest-bearing demand loans totaling $1,075,000 from David Jenkins to Old Catheter were repaid by the Company at or shortly after the closing of the merger. Mr. Jenkins’ daughter, Missiaen Huck, received options to purchase 144,169 shares of the Company’s common stock upon the closing of the Merger in exchange for her options to purchase shares of Catheter common stock, converted based on the exchange ratio in the merger. Of the total options to purchase 144,169 shares of the Company’s common stock, 140,816 options have an exercise price of $0.59 per share, and the remaining 3,353 options have an exercise price of $2.02 per share. Ms. Thomassen received options to purchase 16,764 shares of the Company’s common stock upon the closing of the Merger in exchange for her options to purchase shares of Catheter common stock, converted based on the exchange ratio in the Merger. The options have an exercise price of $0.59 per share. Following stockholder approval on March 21, 2023, we issued 991,828 shares of common stock to Mr. Jenkins and affiliates upon conversion of 991.828 shares of Series X Preferred Stock, and 235,320 shares of common stock to his adult children upon conversion of 235.320 shares of Series X Preferred Stock. Warrant Inducement Offer On January 9, 2023, the Company reduced the exercise price of certain existing warrants (the "Existing Warrants"), exercisable for 331,608 shares of the Company’s common stock held by Armistice Capital Master Fund Ltd. (“Armistice”) with exercise prices ranging from $14.00 to $526.50 per share to $4.00 per share (the "2023 Warrant Repricing"). In connection with the 2023 Warrant Repricing, the Company entered into a warrant inducement offer letter (the "2023 Inducement Letter") with Armistice pursuant to which it would exercise up to all of the 331,608 Existing Warrants (the "Inducement Offer"). In consideration for exercising the Existing Warrants pursuant to the terms of the 2023 Inducement Letter, the Company received approximately $1.3 million in gross proceeds. The Company paid the placement agent aggregate cash fees of approximately $0.2 million related to the Inducement Offer which represented 8.0% of the gross proceeds received from the Inducement Offer plus other offering costs resulting in net proceeds to the Company of $1.1 million. In consideration for exercising the Existing Warrants pursuant to the terms of the 2023 Inducement Letter, the Company issued Armistice a new Series E common stock purchase warrant, or Series E Warrant (the "Series E Warrant"), to purchase 331,608 shares of common stock at an exercise price of $4.00 per share. The Series E Warrant is exercisable for five years from the date of stockholder approval. Exercise of the Series E Warrant in full was subject to approval of the Company's stockholders other than Armistice which was obtained at the stockholders’ meeting held on March 21, 2023 (the ”Stockholders’ Meeting”). Private Placement On January 9, 2023, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) for a private placement (“Private Placement”), with Armistice. Pursuant to the Securities Purchase Agreement, Armistice agreed to purchase, for an aggregate purchase price of approximately $8.0 million, (a) Class A units at a price that was the lower of $3.00 per unit and 90% of the 5 day volume weighted average price of the Company’s common stock immediately prior to obtainment of the approval of the Company’s stockholders of conversion of the PIPE Preferred Stock and PIPE Warrants (as each are defined below), each consisting of one share of common stock, one Series F common stock purchase warrant, or Series F Warrant, and one Series G common stock purchase warrant, or Series G Warrant, and together with the Series F Warrants (the “PIPE Warrants”) and (b) Class B units at a price of $1,000 per unit, each consisting of one share of a new series of the Company’s preferred stock, designated as Series A Convertible Preferred Stock (the “PIPE Preferred Stock”), par value $0.0001, and one Series F Warrant and one Series G Warrant for each share of the Company’s common stock underlying the PIPE Preferred Stock (each share of which is convertible into a number of shares of the Company’s common stock equal to $1,000 divided by the lower of $3.00 and 90% of the 5 day volume weighted average closing price of the Company’s common stock immediately prior to the obtainment of the approval of the Company’s stockholders of conversion of the PIPE Preferred Stock and PIPE Warrants, or the Preferred Conversion Rate). The closing under the Securities Purchase Agreement and the sale and issuance of the Class A units and Class B units (and the issuance of any underlying common stock) were approved at the Stockholders’ Meeting. At the closing of the Private Placement, the Company issued 497,908 Class A units for proceeds of approximately $0.9 million and 7,203 Class B units for proceeds of approximately $7.1 million, the preferred stock underlying which is convertible into up to 4,501,060 shares of common stock, as well as the issuance of warrants described below. The PIPE Warrants, including Series F warrants and Series G warrants, are exercisable at an exercise price of $3.00 per share, subject to adjustments as provided under the terms of the PIPE Warrants. The PIPE Warrants are exercisable at any time on or after the closing date of the Private Placement until the expiration thereof, except that the PIPE Warrants cannot be exercised if, after giving effect thereto, the purchaser would beneficially own more than 4.99%, or the Maximum Percentage, of the outstanding shares of common stock of the Company, which Maximum Percentage may be increased or decreased by the purchaser with written notice to the Company to any other percentage specified not in excess of 9.99%. The Series F Warrants have a term of two years from the date of stockholder approval, and the Series G Warrants have a term of six years from the date of stockholder approval. The Series F Warrants and Series G Warrants were approved at the Stockholders’ Meeting. Issuance of Securities upon Conversion of Series A Preferred On July 5, 2023 the Company issued 1,093,552 shares of its common stock in connection with the conversion of 1,750 shares of its outstanding Series A Convertible Preferred Stock held by Armistice Capital Master Fund Ltd. (“Armistice”). The shares were issued in connection with two separate conversions of 875 shares of Series A Convertible Preferred Stock into 546,776 shares of common stock that occurred on July 3, 2023. Each share of Series A Convertible Preferred Stock is convertible into approximately 625 shares of common stock. On July 24, 2023, the Company issued 546,776 shares of its common stock in connection with the conversion of 875 shares of its outstanding Series A Convertible Preferred Stock held by Armistice. On January 24, 2024, the Company issued 546,776 shares of its common stock in connection with the conversion of 875 shares of its outstanding Series A Convertible Preferred Stock held by Armistice. Indemnification of Officers and Directors We have historically entered into indemnification agreements with directors and executive officers, in addition to the indemnification provided for in our amended and restated certificate of incorporation and amended and restated bylaws, and we may also do so in the future. The indemnification agreements and our amended and restated certificate of incorporation and amended and restated bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. 80 Table of Contents ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Our independent registered public accounting firm is Withum (auditor ID: 100) since June 21, 2023. Withum was also the independent registered public accounting firm that audited the financial statements of Old Catheter for the fiscal year ended December 31, 2022. Fees Paid to the Independent Registered Public Accounting Firms The following table represents aggregate fees for services provided to us in the fiscal year ended December 31, 2023 by Withum. It does not include fees billed to us for services rendered by our previous auditor, Haskell & White LLP, during 2023, or fees billed to us by Withum for pre-Merger services rendered to Old Catheter.: 2023 (Withum) Audit Fees (1) $ 660,872 Audit-Related Fees (2) — Tax Fees (3) — All Other Fees (4) — Total Fees $ 660,872 (1) “Audit Fees” consist of fees billed for professional services rendered during the respective fiscal year in connection with the audit of our annual financial statements, review of our quarterly financial statements, and services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years. This includes consents and other services related to SEC matters and registration statements. (2) “Audit-Related Fees” generally include fees incurred for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements but are not otherwise included as Audit Fees. For fiscal 2023, the fees presented consist of fees billed for professional services rendered in connection with the purchase price allocation and valuation of the business combination with regards to the Merger. (3) “Tax Fees” consist of permissible tax compliance and tax advisory service fees. Withum did not bill us for any tax fees for the year ended December 31, 2023. (4) “All Other Fees” consist of fees billed for services other than the services reported in Audit Fees, Audit-Related Fees, and Tax Fees. Auditor Independence During the year ended December 31, 2023, there were no other professional services provided by Withum that would have required our audit committee to consider their compatibility with maintaining Withum’s independence. Pre-Approval Policy Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent accountants and the related estimated fees. These services may include audit services, audit-related services, tax services and other services. Our audit committee generally pre-approves particular services or categories of services on a case-by-case basis. The independent registered public accounting firm and management are required to periodically report to our audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with these pre-approvals, and the fees for the services performed to date. All of Withum’s services to the Company for fiscal year 2023 described above were pre-approved by our audit committee. 81 Table of Contents PART IV — FINANCIAL INFORMATION ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. (a) We have filed the following documents as part of this Annual Report: 1. Financial Statements . Page Reports of Independent Registered Public Accounting Firms F-1 Consolidated Balance Sheets F-7 Consolidated Statements of Operations F-8 Consolidated Statements of Stockholders’ Equity F-9 Consolidated Statements of Cash Flows F-10 Notes to Consolidated Financial Statements F-11 2. Financial Statement Schedules . There are no financial statement schedules provided because the information called for is either not required or is shown either in the financial statements or the notes thereto. 82 Table of Contents 3. Exhibits. Exhibit Number Description Incorporated by Reference Form File No. Exhibit Filing Date 2.2 Amended and Restated Agreement and Plan of Merger, dated January 9, 2023, by and among the Registrant, certain subsidiaries, and Catheter Precision, Inc. 8-K 001-38677 2.1 1/13/2023 3.1.1 Amended and Restated Certificate of Incorporation of the Registrant. 8-K 001-38677 3.1 10/1/2018 3.1.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (effective 11/16/20) 8-K 001-38677 3.1 11/17/2020 3.1.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (effective 09/30/22) 8-K 001-38677 3.1 9/20/2022 3.1.4 Certificate of Designation of Series X Convertible Preferred Stock. 8-K 001-38677 3.1 1/13/2023 3.1.5 Certificate of Designation of Series A Preferred Stock. 8-K 001-38677 3.2 1/13/2023 3.1.6 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant (effective 08/17/23) 8-K 001-38677 3.1 8/4/2023 3.2.1 Amended and Restated Bylaws of the Registrant. 8-K 001-38677 3.2 10/1/2018 3.2.2 Amendment to Amended and Restated Bylaws of the Registrant. 8-K 001-38677 3.1 8/17/2022 4.2* Description of Capital Stock. 4.3 Form of warrant issued in May 2020. 8-K 001-38677 4.1 5/22/2020 4.4 Form of pre-funded warrant issued in May 2020. 8-K 001-38677 4.2 5/22/2020 4.5 Form of placement agent warrant issued in May 2020. 8-K 001-38677 4.3 5/22/2020 4.6 Form of warrant offered in July 2020. S-1 333-239887 4.3 7/16/2020 4.7 Form of pre-funded warrant issued in July 2020. S-1 333-239887 4.4 7/16/2020 4.8 Form of placement agent warrant offered in July 2020. S-1 333-239887 4.5 7/16/2020 4.9 [omitted.] 4.10 Form of Series B Warrant offered in February 2022. S-1/A 333-262195 4.9 2/3/2022 4.11 Form of Series C Warrant issued in July 2022 8-K 001-38677 4.1 7/22/2022 4.12 Warrant Agency Agreement, dated February 8, 2022, by and between the Registrant and American Stock & Trust Company LLC. 8-K 001-38677 4.4 2/9/2022 4.12.1 Amendment No. 1, dated July 22, 2022, to February 8, 2022 Warrant Agency Agreement by and between the Company and American Stock Transfer & Trust Company, LLC. 10-Q 001-38677 4.7 8/15/2022 4.13 Form of Series E Warrant offered in January 2023. 8-K 001-38677 4.1 1/13/2023 4.14 Form of Series F Warrant issued in March 2023. 8-K 001-38677 4.2 1/13/2023 83 Table of Contents Exhibit Number Description Incorporated by Reference Form File No. Exhibit Filing Date 4.15 Form of Series G Warrant issued in March 2023. 8-K 001-38677 4.3 1/13/2023 10.1 [omitted.] 10.2+ 2018 Form of Indemnification Agreement between the Registrant and directors and executive officers. S-1 333-226191 10.2 8/24/2018 10.3+ Ra Medical Systems, Inc. 2018 Stock Compensation Plan and Forms of Award Agreement thereunder. S-1 333-226191 10.3 7/16/2018 10.4+ Ra Medical Systems, Inc. 2018 Equity Incentive Plan and Forms of Award Agreement thereunder, as amended. 8-K 001-38677 99.1 10/13/2020 10.5 [omitted.] 10.6 [omitted.] 10.7 [omitted.] 10.8 [omitted] 10.9 [omitted.] 10.10+ Change in Control and Severance Agreement, by and between the Registrant and Jonathan Will McGuire, dated as of March 30, 2020. 8-K 001-38677 10.11 4/16/2020 10.10.1+ Amendment to Change in Control and Severance Agreement, dated as of January 9, 2023, by and between Ra Medical Systems, Inc. and Jonathan Will McGuire. 8-K 001-38677 10.6 1/13/2023 10.10.2+ Amendment to Change in Control and Severance Agreement, dated as of April 17, 2023, by and between Ra Medical Systems, Inc. and Jonathan Will McGuire. 8-K 001-38677 10.1 1/19/2023 10.11+ Employment letter by and between the Registrant and Jonathan Will McGuire, dated as of March 9, 2020. S-1 333-237701 10.15 4/16/2020 10.12 [omitted.] 10.13 [omitted.] 10.14 [omitted.] 10.15 Settlement Agreement, among the Company, among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services and the Defense Health Agency, acting on behalf of the TRICARE Program, and Robert Gruber, dated December 28, 2020. 10-K 001-38677 10.19 3/17/2021 10.16 Corporate Integrity Agreement, between the Company and the Office of Inspector General of the Department of Health and Human Services, dated December 28, 2020. 10-K 001-38677 10.20 3/17/2021 10.16.1 Notice of Suspension of Corporate Integrity Agreement, dated January 11, 2023. 10-K 001-38677 10.16.1 3/28/2023 10.17 [omitted.] 10.18 [omitted.] 10.19 [omitted.] 10.20 [omitted.] 10.21 [omitted.] 10.22 [omitted.] 10.23 Warrant Inducement Offer Letter dated July 22, 2022. 8-K 001-38677 10.1 7/22/2022 10.24 Securities Purchase Agreement, dated January 9, 2023, by and among the Company and Armistice Master Fund Ltd. (“January 2023 SPA”). 8-K 001-38677 10.4 1/13/2023 - Ex. A to January 2023 SPA (form of Certificate of Designation of Series A Convertible Preferred Stock). 8-K 001-38677 3.2 1/13/2023 84 Table of Contents Exhibit Number Description Incorporated by Reference Form File No. Exhibit Filing Date - Ex. B to January 2023 SPA (form of Registration Rights Agreement). 8-K 001-38677 10.5 1/13/2023 - Ex. C to January 2023 SPA (form of Series F Warrant). 8-K 001-38677 4.2 1/13/2023 - Ex. D to January 2023 SPA (form of Series G Warrant). 8-K 001-38677 4.3 1/13/2023 10.25 Registration Rights Agreement, dated January 9, 2023. 8-K 001-38677 10.5 1/13/2023 10.26 Warrant Inducement Offer Letter, dated January 9, 2023. 8-K 001-38677 10.3 1/13/2023 10.27.1 Debt Settlement Agreement and Release including certain royalty rights with David A. Jenkins, dated January 9, 2023. 10-K 001-38677 10.27.1 3/28/2023 10.27.2 Debt Settlement Agreement and Release including certain royalty rights with Daniel C. Stanzione, Sr. Irrevocable Trust Dated December 31, 2007, dated January 9, 2023. 10-K 001-38677 10.27.2 3/28/2023 10.27.3 Debt Settlement Agreement and Release including certain royalty rights with Fatboy Capital, L.P., dated January 9, 2023. 10-K 001-38677 10.27.3 3/28/2023 10.28 LockeT Royalty Agreement with Auston Locke. 10-K 001-38677 10.28 3/28/2023 10.29 Joint Marketing Agreement dated January 19, 2021 with Stereotaxis, Inc. (the “Stereotaxis Marketing Agreement”). 10-K 001-38677 10.29 3/28/2023 10.29.1 Extension Agreement dated January 11, 2022 to the Stereotaxis Marketing Agreement. 10-K 001-38677 10.29.1 3/28/2023 10.29.2 Addendum One dated May 27, 2022 to the Stereotaxis Marketing Agreement. 10-K 001-38677 10.29.2 3/28/2023 10.30.1 Lease with respect to Fort Mill facility. 10-K 001-38677 10.30.1 3/28/2023 10.31+ Consulting Agreement dated February 1, 2018, with Patricia Kennedy. 10-K 001-38677 10.31 3/28/2023 10.31.1+ Catheter Precision, Inc. Notice of Nonplan Stock Option Award to Patricia Kennedy dated March 30, 2018. 10-K 001-38677 10.31.1 3/28/2023 10.31.2+ 2023 Equity Incentive Plan DEF 14A 001-38677 Annex C 05/25/2023 10.31.3+* 2023 Form of Nonstatutory Stock Option Agreement for Non-Employee Directors Under 2023 Equity Incentive Plan 10.31.4+* 2023 Form of Nonstatutory Stock Option Agreement Under 2023 Equity Incentive Plan 10.31.5+* 2023 Form of Incentive Stock Option Agreement Under 2023 Equity Incentive Plan 10.31.6+* Notice of Stock Option Award granted March 13, 2021 to Margrit Thomassen under Old Catheter’s 2009 Equity Incentive Plan 10.32 Software and Technology License Agreement dated May 1, 2016, with Peacs BV. 10-K 001-38677 10.32 3/28/2023 10.32.1 Settlement and Amendment Agreement dated May 24, 2021 with Peacs BV. 10-K 001-38677 10.32.1 3/28/2023 85 Table of Contents Exhibit Number Description Incorporated by Reference Form File No. Exhibit Filing Date 16.1 Letter re change in certifying accountant 8-K 001-38677 16.1 6/26/2023 21.1 Subsidiaries of the Registrant. 10-K 001-38677 21.1 3/28/2023 23.1* Consent of WithumSmith+Brown, PC, Independent Registered Public Accounting Firm. 23.2* Consent of Haskell & White LLP, Independent Registered Public Accounting Firm. 24.1* Power of Attorney (contained on signature page). 31.1* Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97* Policy Relating to the Recovery of Erroneously Awarded Compensation 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File (formatted as Inline XBRL) * Filed herewith. The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended (Exchange Act), and is not to be incorporated by reference into any filing of Ra Medical Systems, Inc. under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing. + Indicates a management contract or compensatory plan. ITEM 16. FORM 10–K SUMMARY. None. 86 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CATHETER PRECISION, INC. Date: March 29, 2024 By: /s/ David A. Jenkins David A. Jenkins Executive Chairman and Chief Executive Officer 87 Table of Contents POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David A. Jenkins and Margrit Thomassen, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-facts and agents, or his substitute or substitutes, or any of them, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/ David A. Jenkins Executive Chairman of the Board and Chief Executive Officer March 29, 2024 David A. Jenkins (Principal Executive Officer) /s/ Margrit Thomassen Interim Chief Financial Officer March 29, 2024 Margrit Thomassen (Principal Financial and Accounting Officer) /s/ James Caruso Director March 29, 2024 James Caruso /s/ Martin Colombatto Director March 29, 2024 Martin Colombatto /s/ John P. Francis Director March 29, 2024 John P. Francis 88 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Catheter Precision, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Catheter Precision, Inc., (the “Company”) as of December 31, 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows, for the year ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt Regarding Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the entity has incurred recurring losses from operations and expects to continue to incur operating losses that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-1 Table of Contents Business Combination Description of the Matter On January 9, 2023, the Company completed the acquisition of Catheter Precision Inc. a privately held Delaware Corporation (“Old Catheter”) (the “Merger”). As further described in Note 3 to the consolidated financial statements, the Company accounted for the purchase consideration and related valuation and allocation in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (ASC 805) . Management evaluated all criteria in ASC 805 including the makeup of management and governance before and after the transaction as well as the percentage of voting interests in the Company. Based on the evaluation, the Company concluded that they were the accounting acquirer. Total consideration for the Merger was $72.5 million which represents the sum of the (i) estimated fair value of $69.1 million for the 14,649.592 shares of newly designated Series X Convertible Preferred Stock issued and (ii) the estimated fair value of $3.4 million associated with stock options issued as replacements of Old Catheter share-based payment awards. The Company engaged valuation specialists to fair value the Series X Convertible Preferred Stock that was issued as well as assist in the allocation of purchase price for the acquired assets and liabilities assumed. We identified the evaluation of the Company’s determination of the accounting acquirer and the determination of the purchase price associated with the Merger to be a critical audit matter. The business combination was deemed to be a critical audit matter due to the complexity and subjectivity involved in (1) the evaluation of identifying the accounting acquirer and (2) the determination of the purchase consideration and related valuation and allocation of such consideration. · A high degree of auditor judgment was required in evaluating the relative importance of the indicative factors, individually and in the aggregate, including the post combination voting rights, composition of the board of directors and management, the terms of the newly created Series X Convertible Preferred Stock issued in the Merger, and the entity initiating the business combination. · The determination of the purchase price and the related allocation of the purchase price to the underlying assets acquired and liabilities assumed is a complex process that requires involvement from valuation specialists and significant professional judgment regarding the various inputs into an array of valuations to support the consideration given in the transaction and the underlying allocations. A different conclusion would result in a material difference in the accounting for the Merger. How the Critical Audit Matter was Addressed in the Audit The following are the primary procedures we performed to address this critical audit matter. · We tested the Company’s conclusions that the Company was the accounting acquirer by: · reviewing management’s evaluation process which involved documenting an understanding of the terms in the Amended and Restated Agreement and Plan of Merger and related exhibits as follows: · evaluated management’s assessment of the post combination voting rights, · reviewed the composition of the board of directors and management, F-2 Table of Contents · reviewed the public filings associated with and leading up to and subsequent to the Merger, · reviewed the terms of the newly created Series X Convertible Preferred Stock, · examined the documents associated with the Merger including the Merger Agreement, corporate documents including the articles of incorporation and bylaws of the Company, investor presentations, and board minutes of both the Company and Old Catheter pre- and post-merger, · corroborated our understanding the structure and form of the Merger with external legal counsel. · We evaluated management’s valuations including obtaining audit evidence that supports management’s inputs in generating the forecasts used by the valuation specialists as follows: · audited projections and other significant inputs to each of the calculations to assess reasonableness of the final purchase price allocation, · assessed the professional competence, experience, and objectivity of the Company's external valuation specialist. · utilized our internal valuation specialists to assess the fair value of the Series X Convertible Preferred Stock. · utilized our internal valuation specialist to evaluate the reasonableness of the methodology and valuations of acquired intangible assets. Fair Value of Royalties Payable Description of the Matter As described in Note 10 to the consolidated financial statements, the Company had $6.97 million of royalties payable as of December 31, 2023, based on the fair value of the royalties payable related to the Amigo and LockeT royalty agreements acquired in connection with the Merger. We identified the fair value of royalties payable as a critical audit matter due to its highly sensitive inputs. In determining the fair value management must generate revenue projections through the expiration of the royalty agreements. They also must calculate a revenue-adjusted discount rate which is then applied to calculate the present value of the royalties payable. There is significant uncertainty associated with the projections due to the fact that management must forecast sales for a new product which, while there is interest in the market place and it is being evaluated for use in the hospital environment, it has had no sales as of the date of the valuation. In addition, the calculation of the discount rate requires the involvement of management's valuation specialists. How the Critical Matter was Addressed in the Audit To determine the reasonableness of the fair value of the royalties payable, we: · audited the projections through detailed review of management’s memo and forecast schedules along with review of supporting evidence including: o industry standards, o external data sources, o regulatory factors, o Company press releases and related SEC filings, o copies of presentations given by the Company, · considered any potentially contradicting information, · reviewed the present value calculation of the royalties payable, · assessed the professional competence, experience, and objectivity of the Company's external valuation specialist, · utilized our internal valuation specialist to evaluate the reasonableness of the methodology of the calculation of the revenue-adjusted discount rate. F-3 Table of Contents Assessment of ASC 350 and ASC 360 impairment analysis Description of the Matter As described in Note 2 to the consolidated financial statements, in accordance with ASC 350, Intangibles – Goodwill and Other (ASC 350) and ASC 360, Impairment and Disposal of Long-Lived Assets (ASC 360) , the Company, at least annually or more frequently if certain events or changes in circumstances indicate the carrying value may not be recoverable, management performs an impairment analysis. As a result of the sustained decline of the Company’s stock price from the date of the Merger to the date of each reporting period, the Company assessed their goodwill, intangible assets, and long-lived assets for impairment. The Company performed a quantitative goodwill impairment test, which resulted in the carrying amount of the reporting unit exceeding the estimated fair value of the reporting unit, indicating that the goodwill of the reporting unit was impaired. The Company utilized a combination of an income and market approach to assess the fair value of the reporting unit. The income approach considered the discounted cash flow model, considering projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions. The guideline public company market approach considered marketplace earnings multiples from within a peer public company group. As of December 31, 2023, cumulative goodwill impairment charges of $60.9 million were incurred related to the Company’s single reporting unit. With respect to its long-lived assets, to determine whether the carrying amount of the long-lived asset group is recoverable, the Company determined the estimated future cash flows of the group for a period consistent with that of the primary assets of the group. The sum of the undiscounted cash flows was then compared to the carry amount of the long-lived assets, as of December 31, 2023, to conclude whether the asset group carrying value is recoverable. We identified the assessment of ASC 350 and ASC 360 impairment analysis as a critical audit matter due to the estimation and subjectivity needed to identify impairment triggers and perform an impairment test. The inputs to test are subjective as they are based on management’s forecasts. Additionally, there is complexity that requires the Company to involve valuation specialists in performing the quantitative test. How the Critical Matter was Addressed in the Audit To determine the reasonableness of the goodwill impairment and conclusion the long-lived assets were not impaired we: · reviewed the impairment analyses performed as of each interim reporting period as well as at year-end, · audited the projections utilized by the valuation specialist in the impairment assessment through detailed review of management’s memo and forecast schedules along with review of supporting evidence including: o industry standards, o external data sources, o regulatory factors, o Company press releases and related SEC filings, o copies of presentations given by the Company, F-4 Table of Contents · assessed the professional competence, experience, and objectivity of the Company's external valuation specialist, · utilized our internal valuation specialists to review the methodologies for each quarter’s quantitative impairment analysis. Equity Offerings - Private Placement Description of the Matter As discussed in Note 13, Private Placement , on January 9, 2023, the Company entered into a Securities Purchase Agreement for a private placement for which the Company would issue (a) Class A units consisting of one share of common stock, one Series F common stock purchase warrant, and one Series G common stock purchase warrant and (b) Class B units consisting of one share of newly designated Series A Convertible Preferred Stock, one Series F common stock purchase warrant and one Series G common stock purchase warrant. The Company engaged valuation specialists to fair value the underlying instruments and allocate proceeds accordingly. Management evaluated all criteria under ASC 480 , Distinguishing Liabilities from Equity, to determine the proper accounting treatment for each instrument issued. We identified accounting for this equity-based transaction as a critical audit matter due to the complexity of the offering consisting of preferred stock, common stock and warrants in addition to the related valuation and classification of the instruments. How the Critical Matter was Addressed in the Audit The following are the primary procedures we performed to address this critical audit matter: · reviewed the underlying agreements with the investor, · reviewed management’s accounting treatment analysis memorandum, · due to the complexity of the underlying instrument, we evaluated whether the various instruments issued were free-standing, could be classified as debt or equity, and whether they contained any derivatives, · vouched the proceeds that were raised, · audited management’s allocation of proceeds analysis by o footing/cross footing the schedule for mathematical accuracy, o agreeing amounts to the Company’s accounting treatment analysis memorandum, o agreeing the fair value to the valuation reports prepared by the Company’s valuation specialist, o confirming the price of the Company’s common stock, o agreed share issuances to the Company’s transfer agent report. · utilized our internal valuation specialists to evaluate volatility inputs of the Black-Scholes models that were utilized in allocating the value of each instrument based on the net proceeds raised. /s/ WithumSmith+Brown, PC We have served as the Company’s auditor since 2023. East Brunswick, New Jersey March 29, 2024 PCAOB ID Number 100 F-5 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Catheter Precision, Inc. (formerly, Ra Medical Systems, Inc.) Opinion on the Financial Statements We have audited the accompanying balance sheet of Catheter Precision, Inc. (formerly, Ra Medical Systems, Inc.) (the “Company”) as of December 31, 2022, the related statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2022 and the related notes (collectively referred to as the “financial statements“). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ HASKELL & WHITE LLP HASKELL & WHITE LLP We have served as the Company's auditor from 2021 to 2023. Irvine, California March 28, 2023 F-6 Table of Contents CATHETER PRECISION, INC. (formerly known as RA MEDICAL SYSTEMS, INC.) Consolidated Balance Sheets (in thousands, except par value data) December 31, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 3,565 $ 15,859 Accounts receivable, net 137 — Inventories 44 — Prepaid expenses and other current assets 415 977 Total current assets 4,161 16,836 Property and equipment, net 70 — Lease right-of-use assets 179 — Intangible assets, net 26,318 — Other non-current assets 8 — TOTAL ASSETS $ 30,736 $ 16,836 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 464 $ 92 Accrued expenses 1,733 7,484 Notes payable 184 — Current portion of operating lease liabilities 91 — Total current liabilities 2,472 7,576 Royalties payable 6,974 — Operating lease liabilities 97 — Total liabilities 9,543 7,576 Commitments and contingencies (see Note 17) Stockholders' Equity Preferred Stock, $ 0.0001 par value, 10,000,000 shares authorized Series A Convertible Preferred Stock, $ 0.0001 par value, 7,203 shares designated; 4,578 and 0 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively — — Series X Convertible Preferred Stock, $ 0.0001 par value, 15,404 shares designated; 12,656 and 0 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively — — Common stock, $ 0.0001 par value, 300,000,000 shares authorized; 7,026,627 and 2,161,288 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 1 — Additional paid-in capital 296,901 214,397 Accumulated deficit ( 275,709 ) ( 205,137 ) Total stockholders' equity 21,193 9,260 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 30,736 $ 16,836 See accompanying notes to consolidated financial statements. F-7 Table of Contents CATHETER PRECISION, INC. (formerly known as RA MEDICAL SYSTEMS, INC.) Consolidated Statements of Operations (in thousands, except per share data) Year Ended December 31, 2023 2022 Revenues Product sales $ 442 $ 14 Cost of revenues Product sales 30 42 Service and other — 119 Total cost of revenues 30 161 Gross profit (loss) 412 ( 147 ) Operating expenses Loss on impairment of goodwill 60,934 — Selling, general and administrative 17,122 16,250 Research and development 475 6,392 Restructuring costs — 4,172 Total operating expenses 78,531 26,814 Operating loss ( 78,119 ) ( 26,961 ) Other income, net Interest income 347 — Other income (expense), net ( 8 ) 99 Change in fair value of royalties payable 7,208 — Total other income, net 7,547 99 Loss from operations before income taxes ( 70,572 ) ( 26,862 ) Income taxes — 3 Net loss $ ( 70,572 ) $ ( 26,865 ) Deemed dividend - warrant inducement offer ( 800 ) — Net loss attributable to common stockholders $ ( 71,372 ) $ ( 26,865 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 12.99 ) $ ( 25.98 ) Weighted average common shares used in computing net loss per share, basic and diluted 5,495,070 1,033,822 See accompanying notes to consolidated financial statements. F-8 Table of Contents CATHETER PRECISION, INC. (formerly known as RA MEDICAL SYSTEMS, INC.) Consolidated Statements of Stockholders' Equity (in thousands, except share data) Series A Convertible Preferred Stock Series X Convertible Preferred Stock Common Stock Additional Accumulated Total Stockholders' Shares Amount Shares Amount Shares Amount Paid-In Capital Deficit Equity Balance at December 31, 2021 — $ — — $ — 140,190 $ — $ 191,945 $ ( 178,272 ) $ 13,673 Common stock issued, net — — — — 1,576,200 — 11,638 — 11,638 Warrants issued, net — — — — — — 4,658 — 4,658 Warrants exercised — — — — 445,845 — 5,704 — 5,704 Restricted stock awards cancelled or vested — — — — ( 1,352 ) — — — — Common stock issued pursuant to the vesting of restricted stock units and purchases under employee stock purchase plan — — — — 405 — 5 — 5 Stock-based compensation — — — — — — 447 — 447 Net loss — — — — — — — ( 26,865 ) ( 26,865 ) Balance at December 31, 2022 — $ — — $ — 2,161,288 $ — $ 214,397 $ ( 205,137 ) $ 9,260 Common stock issued upon exercise of options — — — — 402,328 — 238 — 238 Restricted stock awards cancelled or vested — — — — ( 414 ) — — — — Stock-based compensation — — — — — — 1,217 — 1,217 Issuance of Series X Convertible Preferred Stock in merger — — 14,650 — — — 72,544 — 72,544 Conversion of Series X Convertible Preferred Stock — — ( 1,994 ) — 1,993,581 — — — — Issuance of Series A Convertible Preferred Stock in connection with private placement, net 7,203 — — — 497,908 — 7,360 — 7,360 Warrants exercised net — — — — 331,608 — 1,145 — 1,145 Conversion of Series A Convertible Preferred Stock ( 2,625 ) — — — 1,640,328 1 — — 1 Deemed dividend - warrant inducement offer — — — — — — — — — Net loss — — — — — — — ( 70,572 ) ( 70,572 ) Balance at December 31, 2023 4,578 $ — 12,656 $ — 7,026,627 $ 1 $ 296,901 $ ( 275,709 ) $ 21,193 See accompanying notes to consolidated financial statements. F-9 Table of Contents CATHETER PRECISION, INC. (formerly known as RA MEDICAL SYSTEMS, INC.) Consolidated Statements of Cash Flows (in thousands, except share data) For the Years Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 70,572 ) $ ( 26,865 ) Adjustments to reconcile net loss to net cash used in operating activities: Restructuring charges — 2,943 Loss on impairment of goodwill 60,934 — Depreciation and amortization 2,075 421 Stock-based compensation 1,217 447 Change in fair value of royalties payable ( 7,208 ) — Gain on write-off of right-of-use asset and liability — ( 126 ) Loss on sales and disposals of property and equipment — 44 Provision for credit losses — 21 Changes in operating assets and liabilities: Accounts receivable ( 66 ) — Inventories 8 ( 14 ) Prepaid expenses and other assets 876 ( 335 ) Lease right-of-use assets and lease liabilities 4 — Accounts payable ( 550 ) ( 879 ) Accrued expenses ( 7,139 ) 2,009 Accrued interest - related parties ( 198 ) — Other liabilities — ( 234 ) Net cash used in operating activities ( 20,619 ) ( 22,568 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 76 ) ( 17 ) Proceeds from sales of property and equipment — 38 Cash acquired as part of business combination 15 — Net cash (used in) provided by investing activities ( 61 ) 21 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock and warrants 238 18,906 Payments of offering costs related to the issuance of common stock and warrants — ( 1,254 ) Payments on note payable ( 107 ) — Proceeds from exercise of warrants 1,326 6,262 Proceeds from issuance of common stock in connection with the employee stock purchase plan — 5 Payments of costs related to exercise of warrants ( 181 ) ( 558 ) Payments of convertible promissory notes ( 250 ) — Proceeds from the private placement of securities 8,000 — Payments of offering costs related to the private placement of securities ( 640 ) — Net cash provided by financing activities 8,386 23,361 NET CHANGE IN CASH AND CASH EQUIVALENTS ( 12,294 ) 814 CASH AND CASH EQUIVALENTS, beginning of year 15,859 15,045 CASH AND CASH EQUIVALENTS, end of year $ 3,565 $ 15,859 SUPPLEMENTAL CASH FLOW INFORMATION Unpaid offering costs $ — $ 1,356 Cash payments for income taxes $ — $ 3 Non-cash consideration for Catheter acquisition $ 72,544 $ — Conversion of Series A Convertible Preferred Stock for common stock $ 1 $ — Cash payments for interest $ 204 $ — See accompanying notes to consolidated financial statements. F-10 Table of Contents CATHETER PRECISION, INC. (formerly known as RA MEDICAL SYSTEMS, INC.) Notes to Consolidated Financial Statements (in thousands, except share data) Note 1. Organization and Nature of Operations The Company Catheter Precision Inc. (formerly known as Ra Medical Systems, Inc.) ("Catheter" or the "Company or "Legacy RA Medical"), was incorporated in Delaware in July 2018. Catheter was initially formed to develop, commercialize and market its advanced excimer laser-based platform for use in the treatment of vascular and dermatological immune-mediated inflammatory diseases. On January 9, 2023, Catheter entered into the Amended and Restated Agreement and Plan of Merger, or the "Merger Agreement", with Catheter Precision, Inc., or “Old Catheter”, a privately-held Delaware corporation. Under the terms of the Merger Agreement, Old Catheter became a wholly owned subsidiary of Catheter, together referred to as the Company, in a stock-for-stock merger transaction, or the "Merger". After the Merger and looking forward, the legacy Destruction of Arteriosclerotic Blockages by laser Radiation Ablation laser and single-use catheter, together referred to as "DABRA," related assets were no longer used and Catheter’s legacy lines of business were discontinued, but instead the Company has shifted the focus of its operations to Old Catheter’s product lines. Accordingly, the Company’s current activities primarily relate to Old Catheter’s historical business which comprises the design, manufacture and sale of new and innovative medical technologies primarily focused in the field of cardiac electrophysiology, or EP. The Company’s primary product is the View into Ventricular Onset System (“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. The VIVO system has achieved a CE Mark allowing it to be commercialized in the European Union and has been placed at several hospitals in Europe. United States Food and Drug Administration ("FDA") 510(K) clearance in the United States was received and the Company began a limited commercial release of VIVO in 2021. The Company’s newest product, Surgical Vessel Closing Pressure Device ("LockeT"), is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure and is intended to temporarily secure sutures and aid clinicians in locating and removing sutures efficiently. In addition, LockeT is a sterile, Class I product that was registered with the FDA in February 2023, at which time initial shipments began to distributors. Clinical studies for LockeT began during the quarter ended September 30, 2023. These studies are planned to show the product’s effectiveness and benefits, including faster wound closure, earlier ambulation, potentially leading to early hospital discharge, and cost benefits. This information is intended to provide crucial data for marketing and to expand the Company's indications for use with the FDA. The Company’s product portfolio also includes the Amigo ® Remote Catheter System (the "AMIGO" or "AMIGO System"), a robotic arm that serves as a catheter control device. Prior to 2018, Old Catheter marketed Amigo. The Company owns the intellectual property related to Amigo, and this product is under consideration for future research and development of a generation 2 product. Prior to the Merger, Catheter developed an advanced excimer laser-based platform for use in the treatment of vascular immune-mediated inflammatory diseases. DABRA was developed as a tool in the treatment of Peripheral Artery Disease which commonly occurs in the legs. The Company has ceased marketing DABRA. Effective June 6, 2022, the Company’s board of directors approved a staggered reduction in force (“RIF”). On September 2, 2022, the Company completed the RIF. The purpose of the RIF was to preserve capital with the goal of maximizing the opportunities available to the Company in furtherance of the board of directors’ review of strategic alternatives. As a result of the RIF, the Company paused all engineering and manufacturing activities during the third quarter of 2022 for its legacy DABRA Products. F-11 Table of Contents Going Concern As of December 31, 2023, the Company had cash and cash equivalents of approximately $ 3.6 million. For the year ended December 31, 2023, the Company used $ 20.6 million in cash for operating activities. The Company has incurred recurring net losses from operations and negative cash flows from operating activities since inception. As of December 31, 2023, the Company had an accumulated deficit of approximately $ 275.7 million. Management expects operating losses and negative cash flows to continue for the foreseeable future as the Company invests in its commercial capabilities. Additional costs associated with the Merger paid during the years ended December 31, 2023 and 2022, respectively, have substantially depleted the Company’s cash. Following the Merger with Old Catheter, management further reduced staff and other costs while assuming the operating costs of Old Catheter. Of the Company’s cash flows used in operating activities of $ 20.6 million, a portion of them are cash outflows related to the Merger and are non-recurring in nature. Specifically, the Company paid approximately $ 5 .0 million in settlement costs that had been accrued as of December 31, 2022. Management will continue to monitor its operating costs and seek to reduce its current liabilities. Such actions may impair its ability to proceed with certain strategic activities. In January 2023, the Company raised gross proceeds of $ 1.3 million from a 2023 Warrant Repricing (as defined in Note 13, Equity Offerings) and, in March 2023, the Company completed a Private Placement and raised gross proceeds of $ 8 .0 million (see Note 13, Equity Offerings). If expected revenues are not adequate to fund planned expenditures, or if the Company is unsuccessful at raising cash through future capital transactions, it may be required to reduce its spending rate to align with expected revenue levels and cash reserves, although there can be no guarantee that it will be successful in doing so. Accordingly, the Company may be required to raise additional cash through debt or equity transactions. It may not be able to secure financing in a timely manner or on favorable terms, if at all. As a result of these factors, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Note 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements of the Company include the accounts of the Company and Old Catheter. All intercompany transactions have been eliminated in consolidation. The financial results of Old Catheter are included in the consolidated financial statements from the date of completion of the Merger to December 31, 2023. Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Financial Accounting Standards Board (“FASB”) establishes these principles to ensure financial condition, results of operations, and cash flows are consistently reported. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative nongovernmental GAAP as found in the FASB Accounting Standards Codification ("ASC"). Use of Estimates The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The Company’s consolidated financial statements are based upon a number of estimates including, but not limited to, the accounting for the Old Catheter business combination (see Note 3, Business Combination), allowance for credit losses, evaluation of impairment of long-lived assets and goodwill, valuation of long-lived assets and their associated estimated useful lives, reserves for warranty costs, fair value of royalties payable, evaluation of probable loss contingencies, fair value of preferred stock and warrants issued, and the fair value of equity awards granted. F-12 Table of Contents Reclassifications Certain reclassifications have been made to the financial statements for the nine months ended September 30, 2023 to conform to the current period financial statement presentation. Certain regulatory costs of $ 0.1 million for the nine months ended September 30, 2023, that were previously classified in research and development expenses were reclassified to selling, general and administrative expenses in the consolidated statements of operations. Concentrations of Credit Risk The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash equivalents represent highly liquid investments with maturities of 90 days or less at the date of purchase. Credit risk related to cash and cash equivalents is based on the creditworthiness of the financial institutions at which these funds are held. The Company has cash balances at financial institutions which throughout the year may exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. To reduce its risk associated with the failure of any such financial institution, the Company evaluates the rating of the financial institution in which it holds deposits. Any material loss that the Company may experience in the future could have an adverse effect on its ability to pay its operational expenses or make other payments and may require the Company to move its cash to other high quality financial institutions. Currently, the Company is reviewing its bank relationships in order to mitigate its risk to ensure that its exposure is limited or reduced to the Federal Deposit Insurance Corporation protection limits. The Company extends credit to customers in the normal course of business. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the consolidated financial statements. The Company does not require collateral from its customers to secure accounts receivable. The Company had three customers that represented more than 10% of the Company’s consolidated revenue as of December 31, 2023. The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other hedging arrangements. Segment Reporting The Company operates in one business segment, which is the marketing, sales and development of medical technologies focused in the field of cardiac electrophysiology. Cash and Cash Equivalents The Company considers all short-term, highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalents primarily represent funds invested in readily available checking and money market accounts. The Company maintains deposits in financial institutions in excess of federally insured limits of $250,000, in the amount of $ 3.1 million at December 31, 2023. Fair Value Measurements Fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to identify inputs used in measuring fair value as follows: Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; Level 2 - Inputs other than the quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and Level 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. F-13 Table of Contents Cash equivalents, prepaid expenses, trade accounts receivable, accounts payable, and accrued expenses are reported on the consolidated balance sheets at carrying value which approximates fair value due to the short-term maturities of these instruments. The following table details the fair value measurements within the fair value hierarchy of the Company’s financial instruments: Fair value at December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Cash Equivalents Mutual Fund $ 3,397 $ 3,397 $ — $ — Money Market fund 10 10 — — Total assets $ 3,407 $ 3,407 $ — $ — Liabilities Royalties payable $ 6,974 $ — $ — $ 6,974 Total liabilities $ 6,974 $ — $ — $ 6,974 The royalties payable have unobservable inputs that are not supported by any market data. As such the Company developed its own assumptions and identified the inputs as level 3. The revenue adjusted discount rate (“RADR”) was calculated using a weighted average cost of capital (“WACC”) approach for the level 3 measurement. The RADR considers the WACC from the Company’s impairment analysis and adjusts certain inputs to represent the risk profile of the revenue. Under the cost of equity section, the risk-free rate has changed to be commensurate with the royalties payable term. Additionally, the Beta and Company Specific Risk Premium have been adjusted to Revenue Beta and Revenue Specific Risk Premium, respectively. This adjustment was calculated by multiplying the respective metric by the quotient of equity volatility over revenue volatility. The remaining inputs from the Impairment WACC have remained unchanged. Fair value at December 31, 2022 Total Level 1 Level 2 Level 3 Assets: Cash Equivalents Certificate of Deposit $ 300 $ 300 $ — $ — Money Market fund 1,436 1,436 — — Total assets $ 1,736 $ 1,736 $ — $ — Financial Instruments — Credit Losses (ASU 2016-13) In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (“CECL”). The amendments in this update introduce a new accounting model to measure credit losses for financial assets measured at amortized cost. The FASB has also issued additional ASUs to clarify the scope and provide additional guidance for ASU 2016-13. Credit losses for financial assets measured at amortized cost should be determined based on the total current expected credit losses over the life of the financial asset or group of financial assets. In effect, the financial asset or group of financial assets should be presented at the net amount expected to be collected. Credit losses will no longer be recorded under the current incurred loss model for financial assets measured at amortized cost. The amendments also modify the accounting for available-for-sale debt securities whereby credit losses will be recorded through an allowance for credit losses rather than a write-down to the security’s cost basis, which allows for reversals of credit losses when estimated credit losses decline. Credit losses for available-for-sale debt securities should be measured in a manner similar to current GAAP. F-14 Table of Contents There was no impact of applying the CECL methodology upon adoption effective on January 1, 2020. Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade receivables based on three portfolio segments: Hospitals – United States, Hospitals – Europe, and Distributors. The determination of portfolio segments is based primarily on the customers’ industry and geographical location. Our quantitative allowance for credit loss estimates under CECL was determined using the method that uses an aging schedule. The Company also considers qualitative adjustments that may relate to unique risks, changes in current economic conditions that may not be reflected in quantitatively derived results, or other relevant factors to further inform our estimate of the allowance for credit losses. Accounts Receivable and Allowances for Doubtful Accounts Trade accounts receivable are recorded at invoiced amounts, net of allowance for credit losses, if applicable, and are unsecured and do not bear interest. The allowance for doubtful accounts is based on the probability of future collection under the current expected credited loss impairment model under CECL, which was adopted by the Company on January 1, 2020. Under the CECL impairment model, the Company determines its allowance by applying the method based on an aging schedule. The Company also considers reasonable and supportable current information in determining its estimated loss rates, such as external forecasts, macroeconomic trends or other factors including customers’ credit risk and historical loss experience. The adequacy of the allowance is evaluated on a regular basis. Account balances are written off after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries are credited to the allowance. Changes in the allowance are recorded as adjustments to bad debt expense in the period incurred. Accounts receivable consists of the following: December 31, 2023 December 31, 2022 Trade accounts receivable $ 137 $ 152 Less: Reserve for expected credit losses — ( 152 ) Accounts receivable, net - balance at end of period $ 137 $ — Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. The Company reduced the carrying value of inventories for those items that were potentially excess, obsolete or slow-moving based on changes in customer demand, technological developments or other economic factors. Property and Equipment Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives as follows: Machinery and equipment 2 - 5 years Computer hardware and software 2 - 5 years VIVO DEMO/Clinical Systems 2 years Furniture and fixtures 5 years Leasehold improvements are depreciated over the shorter of the useful life of the leasehold improvement or the term of the underlying property’s lease. F-15 Table of Contents The Company periodically reviews the residual values and estimated useful lives of each class of its property and equipment for ongoing reasonableness, considering long-term views on its intended use of each class of property and equipment and the planned level of improvements to maintain and enhance assets within those classes. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the account balances and any resulting gain or loss is recognized in income for the period. The cost of repairs and maintenance is expensed as incurred, whereas significant betterments are capitalized. Impairment of Long-Lived Assets In accordance with ASC 360, Impairment and Disposals of Long-lived Assets, the Company periodically reviews its long-lived assets for impairment when certain events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable. Should the sum of the undiscounted expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. As a result of the sustained decline of the Company's stock price from the date of the Merger, the Company assesses its long-lived assets for impairment. To determine whether the carrying amount of the long-lived asset group is recoverable, the Company determined the estimated future cash flows of the group for a period consistent with that of the primary assets of the group. The sum of the undiscounted cash flows was then compared to the carrying amount of the long-lived assets, as of December 31, 2023. The Company concluded there was no impairment as of December 31, 2023. Due to the Company’s RIF and the decision to discontinue enrollment of patients in its DABRA related clinical trial, the Company ceased manufacturing activities of DABRA . The Company’s property and equipment was determined to be impaired as of June 30, 2022, resulting in an impairment charge of $ 1.5 million which was based on the actual cash proceeds received upon the disposal of the property and equipment in July 2022. The impairment charge of $ 1.5 million is included in restructuring costs in the consolidated statements of operations for the year ended December 31, 2022. Goodwill In accordance with ASC 350, Intangibles – Goodwill and Other , goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of net assets acquired. Goodwill, which represents the excess of purchase price of Old Catheter over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. The Company reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable. To determine whether goodwill is impaired, annually or more frequently if needed, the Company performs a multi-step impairment test. The Company first has the option to assess qualitative factors to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. The Company may also elect to skip the qualitative testing and proceed directly to the quantitative testing. When performing quantitative testing, the Company first estimates the fair values of its reporting units using a combination of an income and market approach. To determine fair values, the Company is required to make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include financial projections of free cash flow (including significant assumptions about operations including the rate of future revenue growth, capital requirements, and income taxes), long-term growth rates for determining terminal value and discount rates. Comparative market multiples are used to corroborate the results of the discounted cash flow test. These assumptions require significant judgment. Pursuant to ASU 2017-04, Simplifying the Test for Goodwill Impairment , the single step is to determine the estimated fair value of the reporting unit and compare it to the carrying value of the reporting unit, including goodwill. To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment. The Company also completes a reconciliation between the implied equity valuation prepared and the Company’s market capitalization. The majority of the inputs used in the discounted cash flow model are unobservable and thus are considered to be Level 3 inputs. The inputs for the market capitalization calculation are considered Level 1 inputs. There were impairment charges of $60.9 million recognized during the year ended December 31, 2023, see Note 3, Business Combination and Note 7, Goodwill, for additional details. Royalties Payable The Company is obligated to pay royalties under various royalty agreements Old Cather had entered into. On January 9, 2023, prior to the consummation of the Merger, Old Catheter entered in an agreement with its Convertible Promissory Noteholders (“Noteholders”), which substantially consisted of amounts due to David A. Jenkins, previously Old Catheter's Chairman of the Board of Directors prior to the Merger, and, currently, the Company’s Executive Chairman of the Board of Directors and Chief Executive Officer, to forgive all accrued interest and future interest expense in exchange for a future royalty right. The Company will pay to the Noteholders a total royalty equal to approximately 12% of net sales of LockeT, commencing upon the first commercial sale, through December 31, 2035 . F-16 Table of Contents In addition, Old Catheter had entered into an agreement with the inventor of LockeT in exchange for the assignment and all rights to LockeT, Pursuant to the agreement, the Company will pay a 5% royalty on net sales up to $1 million in royalties. After $1 million has been paid, and if, and only if, a U.S. patent is granted by the United States Patent and Trademark Office, then the Company will continue to pay a royalty at a rate of 2% of LockeT net sales, until total cumulative royalties of $10 million have been paid (see Note 10, Royalties Payable). During 2006 and 2007, Old Catheter entered into two investment grant agreements with a non-profit foundation for the purpose of funding the initial development of Old Catheter's AMIGO System. The agreement calls for the payment to the foundation, upon successful commercialization of the AMIGO System (see Note 10, Royalties Payable). As of the date of the Merger, the royalties payable had an estimated fair value of approximately $ 14.2 million. As of December 31, 2023, the royalties payable had an estimated fair value of $ 7.0 million. At each reporting period, the fair value is calculated using a discounted cash flow method utilizing a RADR which was 24.1 % as of January 9, 2023 and 28.0 % as of December 31, 2023. Product Warranty The Company’s current products are warrantied against defects in material and workmanship when properly used for their intended purpose and properly maintained. Similarly, the DABRA products were warrantied against defects in material and workmanship when properly used for their intended purpose and appropriately maintained. Accordingly, the Company generally replaced catheters that kinked or failed to calibrate. The product warranty liability was determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor. The product warranty liability also includes the estimated costs of a product recall. The warranty accrual is included in accrued expenses in the accompanying consolidated balance sheets. Warranty expenses are included in cost of revenues in the accompanying consolidated statements of operations. Changes in estimates to previously established warranty accruals resulted from current period updates to assumptions regarding repair and product recall costs and are included in current period warranty expense. Distinguishing Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares. Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet. The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity. Revenue Recognition The Company applies the provisions of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and all related appropriate guidance. The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. F-17 Table of Contents The Company measures revenue based upon the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation. Under ASC 606, revenue is recognized when a customer obtains control of promised goods. To achieve this core principal, the Company applies the following five steps: Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the Company satisfies a performance obligation The Company’s primary product in 2023 was the VIVO System. The VIVO System offers 3D cardiac mapping to help with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to electrophysiology studies. In addition to the VIVO System, customers are provided with VIVO Positioning Patch Sets, which are custom patches, that are used in conjunction with the VIVO System to complete the intended output of the VIVO System. The delivery of the VIVO System, including the VIVO Positioning Patch Sets represents the Company’s primary performance obligation. The Company recognizes revenue upon the delivery of the VIVO system. The Company also provides customers with the option to pay for software upgrades in advance at the time of the contract's inception. Software upgrades are stand-ready services, whereby the Company will provide software upgrade services to the customer when and as upgrades are available. Terms of the period covered by the payment of software upgrades in advance can range from one year to multiple years. Customers have the option to renew terms covered by software upgrades at the end of each term. The stand-ready software upgrades represent the Company's second separate performance obligation and revenue is recognized over the term of the period. The Company invoices the customers after physical possession and control of the VIVO System is transferred to the customer and recognizes revenue upon delivery. The timing of payment for the corresponding invoices is dependent upon the credit terms identified in each contract. The Company invoices customers who pay for software upgrades in advance in conjunction with the invoice for the delivery of the VIVO System, and subsequent renewals of software upgrades are invoiced at the inception of the term. Revenue for these stand-ready services is recognized evenly over the term of the upgrade period, consistently with similar stand-ready services under ASC 606. Similar to the delivery of the VIVO System, the timing of payment for the corresponding invoices is dependent upon the credit terms identified in each contract. The Company has elected the practical expedient to expense costs to obtain a contract, as incurred, as opposed to recognizing the cost as an asset upon occurrence. Disaggregation of Revenue The following table summarizes disaggregated product sales by geographic area ($ in thousands): Year Ended December 31, 2023 2022 Product Sales US $ 331 $ 14 Europe 111 — $ 442 $ 14 F-18 Table of Contents Shipping and Handling Costs Shipping and handling costs charged to customers are included in net product sales, while all other shipping and handling costs are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Advertising and Marketing Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising costs were $ 95 thousand during the year ended December 31, 2023. Advertising costs were immaterial during the year ended December 31, 2022. Patents The Company expenses patent costs, including related legal costs, as incurred and records such costs as selling, general and administrative expenses in the accompanying consolidated statements of operations. Research and Development Major components of research and development costs include personnel expenses, consulting, supplies and clinical trial expenses. Research and development expenses are charged to operations in the period incurred. Stock-Based Compensation The Company records stock-based compensation expense associated with stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) issued to employees, members of the Company’s board of directors and consultants in accordance with the authoritative guidance for stock-based compensation. The Company evaluates whether an award should be classified and accounted for as a liability award or equity award for all stock-based compensation awards granted. The cost of an award of an equity instrument is measured at the grant date, based on the estimated fair value of the award using the Black-Scholes option pricing valuation model (“Black-Scholes model”) which incorporates various assumptions including expected term, volatility and risk-free interest rate, and is recognized as expense on a straight-line basis over the requisite service period of the award, which is generally the vesting period of the respective award. Share-based compensation for an award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized, and any previously recognized compensation expense is reversed. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur. As a result of the Merger, all unvested Old Catheter stock options were subject to accelerated vesting and therefore became fully vested, as of the closing date of the business combination. The Company recognized the fair value of the replacement options as included in consideration transferred to the extent they do not exceed the fair value of the equivalent Old Catheter options. Any incremental fair value was recognized in compensation expense in the post-combination period, with this recognized as a Day 1 expense due to the Old Catheter options becoming fully vested concurrent with the closing of the business combination. Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Any resulting net deferred tax assets are evaluated for recoverability and, accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. An uncertain tax position is considered effectively settled on completion of an examination by a taxing authority if certain other conditions are satisfied. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and other expense, respectively. F-19 Table of Contents Basic and Diluted Net Loss per Share of Common Stock The Company calculates basic net loss per share by dividing net loss by the weighted average number of common shares outstanding during the reporting period. A net loss cannot be diluted so when the Company is in a net loss position, basic and diluted loss per common share are the same. If in the future the Company achieves profitability, the denominator of a diluted earnings per common share calculation will include both the weighted average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be dilutive. Anti-dilutive common stock equivalents excluded from the computation of diluted net loss per share include warrants, stock options, non-vested restricted stock awards, restricted stock units, Series A Convertible Preferred Stock, and Series X Convertible Preferred (see Note 12, Net loss per Share). Net loss attributable to common stockholders consists of net income or loss, as adjusted for actual and deemed dividends declared. The Company recorded a deemed dividend for the modification of existing warrants and issuance of new warrants during the year ended December 31, 2023 of $ 0.8 million. The deemed dividend is added to the net loss in determining the net loss available to common stockholders. Recently Announced Accounting Pronouncements In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) which clarifies guidance for fair value measurement of an equity security subject to a contractual sale restriction and establishes new disclosure requirements for such equity securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2022-03 on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is required to adopt this standard prospectively in fiscal year 2025 for the annual reporting period ending December 31, 2025. The accounting pronouncement is not expected to have a material impact on the Company's related disclosures. Note 3 . Business Combination On January 9, 2023, the Company completed the acquisition of Old Catheter for the purpose of acquiring Old Catheter’s existing and developing product lines based on unique electrophysiology technology. Pursuant to the Merger Agreement, all Old Catheter common stock shares issued and outstanding and convertible promissory notes, representing an aggregate principal of $ 25.2 million, were converted into a right to receive 14,649.592 shares of a new class of the Company’s preferred stock, designated Series X Convertible Preferred Stock. Additionally, all outstanding stock options to purchase Old Catheter common stock were assumed and converted into options to purchase approximately 753,699 shares of the Company's common stock. The total purchase consideration for the Merger was $ 72.5 million which represents the sum of the (i) estimated fair value of the 14,649 .592 Series X Convertible Preferred Stock issued and (ii) the portion of the estimated fair value of $ 3.4 million representing the Company stock options issued in replacement of Old Catheter share-based payment awards as required under FASB Topic 805, Business Combinations ("Topic 805") . The fair value of the Series X Convertible Preferred Stock includes certain discounts applied to the closing stock price of the Company, on January 9, 2023, of $ 6.09 per share. F-20 Table of Contents The following table summarizes the fair value of the consideration associated with the Merger ($ in thousands): Description Fair Value as of January 9, 2023 Fair value of 14,649.592 Series X convertible preferred stock issued $ 69,140 Fair value of Old Catheter’s fully vested stock options 3,404 Total Purchase Price $ 72,544 The Merger is being accounted for as a business combination in accordance with Topic 805 and the Company has been determined to be the accounting acquirer. The Company allocated the purchase price to the assets acquired and liabilities assumed at fair value. The preliminary purchase price allocation reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, liabilities assumed, and goodwill, which were subject to change within the measurement period as preliminary valuations were being finalized (generally one year from the acquisition date). Measurement period adjustments were recorded in the reporting period in which the estimates are finalized, and adjustment amounts were determined. During the three months ended June 30, 2023, the Company recorded measurement period adjustments based on changes to certain estimates and assumptions and their related impact to the purchase price allocation. Developed technology was revised from $ 35.1 million to $ 27.0 million; trademarks were revised from $ 1.7 million to $ 1.3 million; customer relationships were revised from $ 220 thousand to $ 62 thousand; goodwill was revised from $ 56.0 million to $ 60.9 million; and royalties payable were revised from $ 7.6 million to $ 14.2 million. The following table summarizes the final purchase price allocations relating to the Merger ($ in thousands): Description Fair Value Assets acquired: Cash and cash equivalents $ 15 Accounts receivable 71 Inventories 52 Prepaid expenses and other current assets 23 Property and equipment, net 26 Lease right-of-use assets 119 Other assets 8 Developed technology 27,014 Customer relationships 62 Trademarks 1,285 Goodwill 60,934 Total assets acquired $ 89,609 Liabilities assumed: Accounts payable $ 922 Accrued expenses 1,389 Lease liability 124 Interest payable 198 Convertible promissory notes 250 Royalties payable 14,182 Total liabilities assumed 17,065 Total purchase price $ 72,544 F-21 Table of Contents All intangible assets acquired are subject to amortization and their associated estimated acquisition date fair values and estimated useful lives are as follows: Intangible Assets Estimated Fair Value Estimated Useful Life Developed technology- VIVO $ 8,244 15 Developed technology- LockeT 18,770 14 Customer relationships 62 6 Trademark- VIVO 876 9 Trademark- LockeT 409 9 $ 28,361 Notwithstanding the above, as described in Note 7, management determined that there were indicators of asset impairment during the year ended December 31, 2023, and assessed the carrying values of the Company’s intangible assets and goodwill. As a result, the Company recorded an impairment charge relating to goodwill of $ 60.9 million during the year ended December 31, 2023. Transaction costs incurred in connection with this business combination amounted to approximately $ 1.7 million during the year ended December 31, 2023. Pro Forma Financial Information The following table represents the revenue, net loss and net loss per share effect of the acquired company, as reported on a pro forma basis as if the acquisition occurred on January 1, 2022. These pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the first day of the period presented, nor does the pro forma financial information purport to represent the results of operations for future periods. The following information for the years ended December 31, 2023 and 2022 is presented in thousands except for the per share data ($ in thousands, except per share data): For the Years Ended December 31, 2023 2022 Revenues $ 445 $ 355 Net loss $ ( 70,742 ) $ ( 40,652 ) Net loss attributable to common stockholders $ ( 71,542 ) $ ( 41,559 ) Basic and diluted net loss per share – on a pro forma basis $ ( 11.83 ) $ ( 22.30 ) Note 4 . Inventories Inventories consisted of the following ($ in thousands): December 31, 2023 2022 Raw materials $ 27 $ — Finished goods 17 — Inventories $ 44 $ — There were no inventory obsolescence charges for the year ended December 31, 2023. Due to the Company's RIF and decision to discontinue enrollment of patients in its DABRA clinical trial, the Company suspended manufacturing activities of DABRA products in June 2022 and disposed of substantially all DABRA related inventories in July 2022, resulting in a write-down of $1.0 million in its inventories to net realizable value. Such expense is included in restructuring and impairment charges in the consolidated statements of operations for the year ended December 31, 2022. F-22 Table of Contents Note 5 . Property and Equipment Property and equipment, net consisted of the following ($ in thousands): December 31, 2023 2022 Machinery and equipment $ 16 $ — Computer hardware and software 17 — VIVO DEMO/Clinical Systems 69 — Property and equipment, gross 102 — Accumulated depreciation ( 32 ) — Property and equipment, net $ 70 $ — Depreciation expense was $ 32 thousand and $ 179 thousand for the years ended December 31, 2023 and 2022, respectively. Due to the Company’s decision to discontinue enrollment of patients in its DABRA clinical trial and the RIF, the Company suspended manufacturing activities of DABRA products in June 2022. The Company’s property and equipment was determined to be impaired as of June 30, 2022, resulting in an impairment charge of $ 1.5 million which was based on the actual cash proceeds received upon the disposal of the property and equipment in July 2022. The impairment charge of $ 1.5 million is included in restructuring and impairment charges in the consolidated statements of operations for the year ended December 31, 2022. Note 6. Intangible Assets The following table summarizes the Company’s intangible assets as of December 31, 2023 ($ in thousands): Estimated Useful Life in Years Gross Carrying Amount at January 9, 2023 Accumulated Amortization Net Book Value at December 31, 2023 Developed technology ‐ VIVO 15 $ 8,244 $ ( 550 ) $ 7,694 Developed technology ‐ LockeT 14 18,770 ( 1,341 ) 17,429 Customer relationships 6 62 ( 10 ) 52 Trademarks/trade names ‐ VIVO 9 876 ( 97 ) 779 Trademarks/trade names ‐ LockeT 9 409 ( 45 ) 364 $ 28,361 $ ( 2,043 ) $ 26,318 As of December 31, 2022 the Company did not have any intangible assets. The estimated future amortization expense for the next five years and thereafter is as follows ($ in thousands): Years ending December 31, Future Amortization Expense 2024 $ 2,043 2025 2,043 2026 2,043 2027 2,043 2028 2,043 Thereafter 16,103 Total $ 26,318 F-23 Table of Contents The Company uses the straight-line method to determine the amortization expense for its definite lived intangible assets. Amortization expense, included within selling, general and administrative expenses, relating to the purchased intangible assets was $ 2.0 million and $ 0 for the years ended December 31, 2023 and 2022, respectively. The weighted average remaining amortization period for the Company’s intangible assets as of December 31, 2023, is 13.06 years. Note 7 . Goodwill In connection with the Merger, the excess of the purchase price over the estimated fair value of the net assets assumed of $ 60.9 million was recognized as goodwill. The Company tests Goodwill for impairment at the reporting unit level annually in the fourth quarter or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. Due to a sustained decrease in the Company’s share price during the quarters ended March 31, 2023 and June 30, 2023, the Company concluded that, in accordance with ASC 350, a triggering event occurred indicating that potential impairment exists and required the Company to assess if impairment exists as of March 31, 2023 and June 30, 2023. In accordance with ASC 350, the Company performed a quantitative goodwill impairment test, which resulted in the carrying amount of the reporting unit exceeding the estimated fair value of the reporting unit, indicating that the goodwill of the reporting unit was impaired. The Company utilized a combination of an income and market approach to assess the fair value of the reporting unit. The income approach considered the discounted cash flow model, considering projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions. The guideline public company market approach considered marketplace earnings multiples from within a peer public company group. As of December 31, 2023, cumulative goodwill impairment charges of $ 60.9 million were incurred related to the Company’s single reporting unit. The following is a roll forward of goodwill as of December 31, 2023 ($ in thousands): Balance at beginning of year $ — Goodwill recognized in connection with the Merger (Note 3) 60,934 Impairment charge ( 60,934 ) Balance at end of year $ — Note 8 . Accrued Expenses Accrued expenses consisted of the following ($ in thousands): December 31, 2023 2022 Legal expenses $ 102 $ 195 DOJ settlement — 5,000 Offering costs 1,356 1,356 Compensation and related benefits 43 369 Warranty expenses — 192 Other accrued expenses 232 372 Accrued expenses $ 1,733 $ 7,484 F-24 Table of Contents Activity in the product warranty accrual is included in accrued expenses in the consolidated balance sheets and consisted of the following ($ in thousands): Year Ended December 31, 2023 2022 Balance at beginning of year $ 192 $ 195 Claims satisfied — ( 3 ) Removal of accrued warranty ( 192 ) — Balance at end of year $ — $ 192 The warranty relates to the voluntary recall of DABRA catheters, which was initiated in September 2019. The recall was closed by the FDA in July 2023 and no claims have been submitted in approximately 2 years. As such, the Company derecognized the warranty liability as of December 31, 2023. Note 9. Notes Payable The Company purchased director and officer liability insurance coverage on October 16, 2023 for $ 447 thousand. A down payment of $ 157 thousand was made and the remaining balance of $ 291 thousand was financed over 8 months through a short-term financing arrangement with its insurance carrier. The interest rate on the loan is 8.990 %. Interest expense on this loan for the year ended December 31, 2023 was $ 6 thousand. The loan balance as of December 31, 2023 was $ 184 thousand. Note 10. Royalties Payabl e LockeT Royalty On January 9, 2023 Old Catheter entered into an agreement with the Noteholders to forgive all accrued interest and future interest expense in exchange for a future royalty right. Under these agreements, the Company is obligated to pay the Noteholders a total royalty equal to approximately 12 % of net sales of its LockeT device, commencing upon the first commercial sale, through December 31, 2035. The remaining accrued interest for the note not converted at closing of the Merger was paid on February 9, 2023. An additional royalty will be paid to the inventor of the LockeT device. In exchange for the assignment and all rights to LockeT, the Company will pay a 5% royalty on net sales up to $1.0 million in royalties, payable annually in arrears, starting with the year ending December 31, 2022. After $1.0 million has been paid, and if, and only if, a US patent is granted by the United States Patent and Trademark Office, the Company will continue to pay a royalty at a rate of 2% of net sales, until total cumulative royalties of $ 10.0 million have been paid. The royalty payments will apply to revenues through February 29, 2032 , then will terminate regardless of whether the full $ 10.0 million has been paid. AMIGO System Royalty During 2006 and 2007, Old Catheter entered into two investment grant agreements with a non-profit foundation for the purpose of funding the initial development of Old Catheter's AMIGO System, receiving a total of $ 1.6 million from the foundation. The agreement calls for the payment of the following sales-based royalties, by Old Catheter, to the foundation, upon successful commercialization of the AMIGO System: Royalty Percentage Until Royalty Payment Reaches a Total of 4 % $ 1,589,500 2 % $ 3,179,000 1 % In perpetuity F-25 Table of Contents The Company is not actively marketing and selling the AMIGO System. There was no royalty expense recorded for the years ended December 31, 2023 and 2022 in relation to the AMIGO System. The AMIGO System royalty has been earned and payment has been deferred to a future date. The table below represents the change in fair value of level 3 royalties payable for the year ended December 31, 2023. See Note 2, Summary of Significant Accounting Policies, for valuation techniques. Balance at beginning of year $ — AMIGO royalty payable recognized in connection with the Merger 160 LockeT royalty payable recognized in connection with the Merger 14,022 Change in fair value of royalties payable ( 7,208 ) Balance at end of year $ 6,974 Note 11. Leases For the years ended December 31, 2023 and 2022, operating lease expense was $ 94 thousand and $ 365 thousand, respectively, and cash paid was $ 95 thousand and $ 360 thousand, respectively. Variable costs were insignificant for the years ended December 31, 2023 and 2022. The Company's lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies with similar credit ratings and of comparable quality and derived an imputed rate, which was used in a portfolio approach to discount its real estate lease liabilities. Management used an estimated incremental borrowing rate as detailed below for each lease. Lease Terms and Discount Rate The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases, as of December 31, 2023: Weighted average remaining lease term (in years) - operating leases 2.05 Weighted average discount rate - operating leases 8.56 % California Operating Lease The Company had an operating lease for office and manufacturing space which required it to pay base rent and certain utilities. Monthly rent expense was recognized on a straight-line basis over the term of the lease which was set to expire in 2027 . The operating lease was included on the consolidated balance sheets at the present value of the lease payments at a 7% discount rate which approximates the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment, as the lease did not provide an implicit rate. On October 24, 2022, the Company entered into a lease termination agreement (the “Lease Termination Agreement”) with the landlord, pursuant to which it terminated the lease agreement for its office and manufacturing space in Carlsbad, California, effective October 28, 2022. In accordance with the terms of the Lease Termination Agreement, the Company agreed to (i) release its right to the security deposit of approximately $ 36 thousand previously paid to the landlord and (ii) pay a $ 0.3 million lease termination fee to the landlord. As a result of the Lease Termination Agreement, the Company wrote off its operating lease right-of-use asset, operating lease liability and security deposit, resulting in a non-cash gain of approximately $ 0.1 million. The lease termination fee of $ 0.3 million was paid on October 31, 2022. F-26 Table of Contents South Carolina Office Lease Agreement On September 27, 2022, Old Catheter entered into a lease agreement for office space located in Fort Mill, South Carolina. The space is used for office and general use. The term of the lease began on October 1, 2022, is 38 months, and includes two months of free rental from the commencement date of the lease. The lease contains two separate 36 month renewal periods, which require 180 days notice of the Company's intention to exercise. As of the date of these consolidated financial statements, the Company does not intend to exercise either of the two extension options. Total rent is $ 3,435 per month for the first ten months following the two months of free rent, with annual increases on the anniversary of the effective date. The Company has adopted the practical expedient under Topic 842, which permits the Company to account for each separate lease component of a contract and its associated non-lease components as a single lease payment. As a result, beginning at lease inception on October 1, 2022, the Company will recognize both the lease payments and associated common area maintenance payments as a single lease payment. The Company estimated an incremental borrowing rate of 11.09 % for this lease agreement. New Jersey Office Lease Agreement On December 7, 2022, Old Catheter entered into a lease agreement for office space located in Augusta, New Jersey. The space is used for office and general use. The term of the lease is 24 months and began on January 1, 2023. The lease contains one 24 month renewal period, which requires 9 months’ notice if the Company intends to exercise. As of the date of the consolidated financial statements, the Company does not intend to exercise the extension option. Total rent is $ 1,207 per month throughout the term of the lease agreement. The Company estimated an incremental borrowing rate of 10 % for this lease agreement. Park City Office Lease Agreement On March 19, 2023, the Company entered into a lease agreement for office space located in Park City, Utah. The space is used for office and general use. The term of the lease is for 36 months and began on May 1, 2023. The lease contains one 36 month renewal period, which requires 180 days’ notice of the Company's intention to exercise. As of the date of these consolidated financial statements, the Company does not intend to exercise the extension option. Total rent is $ 3,200 per month for the first year with an annual increase of three percent per year on the anniversary of the effective date. The Company estimated an incremental borrowing rate of 6 % for this lease agreement. Future lease payments for all lease obligations for the following five fiscal years and thereafter are as follows ($ in thousands): Years ending December 31: Operating Lease 2024 $ 96 2025 81 2026 14 Total minimum lease payments 191 Less effects of discounting ( 3 ) Present value of future minimum lease payments $ 188 F-27 Table of Contents Lease right-of-use lease assets and lease liabilities for the Company's operating leases were recorded in the consolidated balance sheets as follows ($ in thousands): December 31, 2023 2022 Assets Lease right-of-use assets $ 179 $ — Total lease assets $ 179 $ — Liabilities Current liabilities: Lease liabilities - current portion $ 91 $ — Non-current liabilities: Lease liabilities - net of current portion 97 — Total lease liabilities $ 188 $ — Note 12 . Net Loss per Share The Company’s outstanding warrants to purchase common stock have participation rights to any dividends that may be declared in the future and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to the participating securities since the holders have no contractual obligation to share in the losses of the Company. Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share at December 31, 2023 consisted of Series A convertible preferred stock of 4,578 shares, Series X Convertible Preferred Stock of 12,656 shares, warrants of 11,042,137 , stock options of 214,652 , and no restricted stock awards or restricted stock units. Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share at December 31, 2022 consisted of warrants of 1,150,658 , stock options of 990 , restricted stock awards of 948 , restricted stock units of 61 and no shares under the Employee Stock Purchase Plan. Net loss attributable to common stockholders consists of net loss, as adjusted for deemed dividends. The Company recorded a deemed dividend for the modification of existing warrants and issuance of the Series E warrants (see Note 13, Equity Offerings) of $ 0.8 million, during the year ended December 31, 2023. Note 13. Equity Offerings Public Offering On February 8, 2022, the Company completed an offering (the "2022 Offering") in which it issued and sold (i) 190,700 shares of common stock, (ii) 480,052 warrants to purchase one share of common stock at an exercise price of $ 25.00 that were immediately exercisable and expired one year from the date of issuance, or Series A warrants, and (iii) 480,052 warrants to purchase one share of common stock at an exercise price of $ 25.00 that were immediately exercisable and expire seven years from the date of issuance, or Series B warrants, and (iv) 289,352 pre-funded warrants to purchase one share of common stock at an exercise price of $ 0.005 per share that were immediately exercisable and expire twenty years from the date of issuance. In addition, the Company granted the underwriters of the 2022 Offering a 45 -day option (the “Overallotment Option”) to purchase up to (i) 72,000 additional shares of common stock, (ii) 72,000 additional Series A warrants and/or (iii) 72,000 additional Series B warrants, solely to cover overallotments. F-28 Table of Contents The Series A warrants and Series B warrants were valued at approximately $4.2 million and $7.4 million, respectively, for a total of $ 11.6 million using the Black-Scholes model based on the following assumptions: Series A Series B Risk-free interest rate 0.91 % 1.93 % Volatility 131.07 % 85.38 % Expected dividend yield 0.00 % 0.00 % Expected life (in years) 1 .0 7 .0 Pursuant to the exercise of the Overallotment Option in February 2022, the Company issued 24,902 shares of common stock, 72,000 Series A warrants and 72,000 Series B warrants, net of underwriting discounts. On various dates in February 2022 and March 2022, the Company issued 289,352 shares of common stock upon the exercise of all of the pre-funded warrants issued in the 2022 Offering. In addition, in March 2022, the Company issued 1,000 shares of common stock in connection with the exercise of 500 each of Series A warrants and Series B warrants issued in the 2022 Offering. In July 2022, the Company issued 800 shares of common stock in connection with the exercise of 800 Series A warrants issued in the 2022 Offering. Net proceeds received from the 2022 Offering were approximately $ 11.5 million, after deducting underwriter commissions and fees withheld of approximately $ 1.1 million. In addition, the Company incurred offering expenses paid or payable of $ 1.8 million. The Company entered into an agreement with a former placement agent that, subject to satisfaction of the requirements contained therein, called for a cash tail fee payable based on capital raised from certain investors for a definitive time following the expiration of the agreement. The accrued cash tail fee of approximately $ 0.9 million related to the 2022 Offering is included in accrued expenses in the consolidated balance sheet as of December 31, 2022. Additionally, the agreement called for the issuance of a warrant to purchase approximately 33,000 shares of common stock at an exercise price of $31.25 per share. Such warrant would be immediately exercisable and expire five years from the date issued. This warrant was originally valued at approximately $ 0.4 million on the date of the 2022 Offering using the Black-Scholes model based on the following assumptions: expected volatility of 93.25 %, risk-free interest rate of 1.81 %, expected dividend yield of 0 % and an expected term of 5 years. On the date of the 2022 Warrant Repricing (as defined below), this warrant was revalued at approximately $ 0.4 million using the Black-Scholes model based on the following assumptions: expected volatility of 98.9 %, risk-free interest rate of 2.87 %, expected dividend yield of 0 % and an expected term of 4.6 years. This warrant has not been issued by the Company as of the date of this Annual Report. 2022 Warrant Repricing On July 22, 2022, the Company reduced the exercise price of all outstanding warrants, consisting of Series A warrants and Series B warrants, that were issued in the public offering on February 8, 2022 (the "2022 Offering") from $25.00 per share to $ 14.00 per share (the “2022 Warrant Repricing”). Following the 2022 Warrant Repricing, the Company entered into warrant inducement offer letters (the “2022 Inducement Letters”) with certain investors. In response to the 2022 Inducement Letters, investors exercised approximately 0.4 million Series A warrants and no Series B warrants. Investors who exercised their Series A warrants received Series C warrants to purchase 100 % of the shares exercised pursuant to the Series A warrants. The Series C warrants have an exercise price of $ 14.00 , are immediately exercisable and expire in five years . The Company received net proceeds of approximately $ 4.9 million from the exercises of the Series A warrants, after deducting underwriter commissions and fees withheld of $ 0.6 million and other offering expenses paid or payable of $0.7 million. The 2022 Warrant Repricing resulted in an immediate and incremental increase of approximately $ 2.3 million in the estimated fair value of the Series A warrants and Series B warrants issued in the 2022 Offering. F-29 Table of Contents The Series A warrants and Series B warrants were valued on the date of the 2022 Warrant Repricing using the Black-Scholes model based on the following assumptions: Series A Series B Risk-free interest rate 2.97 % 2.85 % Volatility 137.87 % 90.44 % Expected dividend yield 0.00 % 0.00 % Expected life (in years) 0.6 6.6 The Series C warrants were valued on the date of the 2022 Warrant Repricing at approximately $ 2.3 million using the Black-Scholes model based on the following assumptions: Risk-free interest rate 2.87 % Volatility 96.70 % Expected dividend yield 0.00 % Expected life (in years) 5 .0 The Company entered into an agreement with a former placement agent that, subject to satisfaction of the requirements contained therein, called for a cash tail fee payable based on capital raised from certain investors for a definitive time following the expiration of the agreement. The accrued cash tail fee of approximately $ 0.5 million related to the 2022 Warrant Repricing is included in accrued expenses in the consolidated balance sheet as of December 31, 2022. Additionally, the agreement called for the issuance of a warrant to purchase approximately 31,000 shares of common stock with an exercise price of $ 17.50 per share, expiring five years from the date issued. This warrant was valued at approximately $ 0.2 million on the 2022 Warrant Repricing date using the Black-Scholes model based on the following assumptions: expected volatility of 96.7 %, risk-free interest rate of 2.87 %, expected dividend yield of 0% and an expected term of 5 .0 years. This warrant has not been issued by the Company as of the date of this Annual Report. At-The-Market Sales Agreement On September 2, 2022, the Company entered into the At-The-Market Sales Agreement (the “ATM Agreement”) under which the Company could sell its common stock from time to time having an aggregate offering price of up to $ 7.6 million. The Company completed the sale of 1,071,240 shares of common stock under the ATM Agreement on October 7, 2022, at a weighted average price of $ 7.09 per share, resulting in net proceeds of approximately $ 7.4 million, after offering fees withheld of approximately $ 0.2 million. Warrant Inducement Offer On January 9, 2023, the Company reduced the exercise price of certain existing warrants (the "Existing Warrants"), exercisable for 331,608 shares of the Company’s common stock held by a certain investor (the “Investor”), with exercise prices ranging from $ 14.00 to $ 526.50 per share to $ 4.00 per share (the "2023 Warrant Repricing"). In connection with the 2023 Warrant Repricing, the Company entered into a warrant inducement offer letter (the "2023 Inducement Letter") with the Investor pursuant to which it would exercise up to all of the 331,608 Existing Warrants (the "Inducement Offer"). In consideration for exercising the Existing Warrants pursuant to the terms of the 2023 Inducement Letter, the Company received approximately $ 1.3 million in gross proceeds. The Company paid the placement agent aggregate cash fees of approximately $0.2 million related to the Inducement Offer which represented 8.0% of the gross proceeds received from the Inducement Offer plus other offering costs resulting in net proceeds to the Company of $ 1.1 million. In consideration for exercising the Existing Warrants pursuant to the terms of the 2023 Inducement Letter, the Company issued the Investor a new Series E common stock purchase warrant, or Series E Warrant (the "Series E Warrant"), to purchase 331,608 shares of common stock at an exercise price of $ 4.00 per share. The Series E Warrant is exercisable for five years from the date of stockholder approval. Exercise of the Series E Warrant in full was subject to approval of the Company's stockholders other than the Investor, which was obtained at a special meeting of the Company’s stockholders held on March 21, 2023 (the “Stockholders’ Meeting”). The incremental fair value of the repriced warrants amounted to $0.3 million and the fair value of Series E warrant totaled $ 1.9 million. The relative fair value of such amounts were recorded to additional paid-in capital concurrent with the exercise of the Existing Warrants. F-30 Table of Contents As a result of the 2023 Warrant Repricing and Inducement Offer, the Company presents a deemed dividend for the modification of Existing Warrants and issuance of the Series E Warrants of $ 0.8 million during the year ended December 31, 2023. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the consolidated statements of operations. The warrants, other than the Series E Warrants which are presented in a separate table below, were valued on the date of the 2023 Warrant Repricing using the Black-Scholes model based on the following assumptions: 5/22/2020 Raise 8/3/20 Raise Series B Series C Risk-free interest rate 4.06 % 4.06 % 3.60 % 3.66 % Volatility 135.35 % 132.55 % 115.42 % 127.65 % Expected dividend yield 0.00 % 0.00 % 0.00 % 0.00 % Expected life (in years) 2.4 2.6 6.5 4.5 The Series E warrants were also valued on the date of the 2023 Warrant Repricing at approximately $ 1.9 million using the Black-Scholes model based on the following assumptions: Risk-free interest rate 3.66 % Volatility 124.07 % Expected dividend yield 0.00 % Expected life (in years) 5 .0 Private Placement On January 9, 2023, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) for a private placement (“Private Placement”), with the Investor. Pursuant to the Securities Purchase Agreement, the Investor agreed to purchase, for an aggregate purchase price of approximately $8.0 million, (a) Class A units at a price that was the lower of $ 3.00 per unit and 90% of the 5 day volume weighted average price of the Company’s common stock immediately prior to obtainment of the approval of the Company’s stockholders of conversion of the PIPE Preferred Stock and PIPE Warrants (as each are defined below), each consisting of one share of common stock, one Series F common stock purchase warrant, or Series F Warrant, and one Series G common stock purchase warrant, or Series G Warrant, and together with the Series F Warrants (the “PIPE Warrants”) and (b) Class B units at a price of $ 1,000 per unit, each consisting of one share of a new series of the Company’s preferred stock, designated as Series A Convertible Preferred Stock (the “PIPE Preferred Stock”), par value $ 0.0001 , and one Series F Warrant and one Series G Warrant for each share of the Company’s common stock underlying the PIPE Preferred Stock (each share of which is convertible into a number of shares of the Company’s common stock equal to $ 1,000 divided by the lower of $ 3.00 and 90% of the 5 day volume weighted average closing price of the Company’s common stock immediately prior to the obtainment of the approval of the Company’s stockholders of conversion of the PIPE Preferred Stock and PIPE Warrants, or the Preferred Conversion Rate). The closing under the Securities Purchase Agreement and the sale and issuance of the Class A units and Class B units (and the issuance of any underlying common stock) were approved at the Stockholders’ Meeting. At the closing of the Private Placement, the Company issued 497,908 Class A units for proceeds of approximately $ 0.9 million and 7,203 Class B units for proceeds of approximately $ 7.1 million which were convertible into up to 4,501,060 shares of common stock, as well as the issuance of warrants described below. The PIPE Warrants, including Series F warrants and Series G warrants, are exercisable at an exercise price of $3.00 per share, subject to adjustments as provided under the terms of the PIPE Warrants. The PIPE Warrants are exercisable at any time on or after the closing date of the Private Placement until the expiration thereof, except that the PIPE Warrants cannot be exercised if, after giving effect thereto, the purchaser would beneficially own more than 4.99%, or the Maximum Percentage, of the outstanding shares of common stock of the Company, which Maximum Percentage may be increased or decreased by the purchaser with written notice to the Company to any other percentage specified not in excess of 9.99%. The Series F Warrants have a term of two years from the date of stockholder approval, and the Series G Warrants have a term of six years from the date of stockholder approval. The Series F Warrants and Series G Warrants were approved at the Stockholders’ Meeting. F-31 Table of Contents The Series F warrants and Series G warrants were valued, in aggregate, at approximately $ 5.5 million using the Black-Scholes model based on the following assumptions: Series F Series G Risk-free interest rate 3.8 % 3.4 % Volatility 80.0 % 74.0 % Expected dividend yield 0.0 % 0.0 % Expected life (in years) 2 .0 6 .0 The proceeds from the Securities Purchase Agreement were allocated to the equity instruments issued based on their relative fair values and recorded in additional paid-in capital. Shares of PIPE Preferred Stock, the conversion of which was approved at the Stockholders’ Meeting, convert into common stock at the option of the holder at the Preferred Conversion Rate, subject to certain ownership limitations as described below. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. Subject to limited exceptions, holders of shares of PIPE Preferred Stock will not have the right to convert any portion of their Preferred Stock if the holder, together with its affiliates, would beneficially own in excess of 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to its conversion. Holders of PIPE Preferred Stock will be entitled to receive dividends on shares of PIPE Preferred Stock equal, on an as-if-converted-to-common stock basis, and in the same form as dividends actually paid on shares of the common stock. Except as otherwise required by law, the PIPE Preferred Stock does not have voting rights. The Company also entered into a registration rights agreement with the purchasers requiring the Company to register the resale of the shares of common stock, the shares issuable upon exercise of the Warrants and the shares issuable upon the conversion of the PIPE Preferred Stock. Conversion of Preferred Stock Issued in Private Placement On July 5, 2023 the Company issued 1,093,552 shares of its common stock in connection with the conversion of 1,750 shares of its outstanding Series A Convertible Preferred Stock. The shares were issued in connection with two separate conversions of 875 shares of Series A Convertible Preferred Stock into 546,776 shares of common stock that occurred on July 3, 2023. Each share of Series A Convertible Preferred Stock is convertible into approximately 625 shares of common stock. The common stock was issued pursuant to the exemption contained in Section 3(a)(9) of the Securities Act of 1933, as amended (the “Act”), which applies to transactions in which a security is exchanged by an issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. The shares issued have been registered for resale on an effective registration statement on Form S-1. On July 24, 2023, the Company issued 546,776 shares of its common stock in connection with the conversion of 875 shares of its outstanding Series A Convertible Preferred Stock. The common stock was issued pursuant to the exemption contained in Section 3(a)(9) of the Act, which applies to transactions in which a security is exchanged by an issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. The shares issued have been registered for resale on an effective registration statement on Form S-1. See Note 20, Subsequent Events, for additional conversion. F-32 Table of Contents Warrants The following table presents the number of common stock warrants outstanding: Warrants outstanding, December 31, 2021 48,352 Issued 1,548,151 Exercised ( 445,845 ) Expired — Warrants outstanding, December 31, 2022 1,150,658 Issued 10,329,794 Exercised ( 331,608 ) Expired ( 106,707 ) Warrants outstanding, December 31, 2023 11,042,137 The following table presents the number and type of common stock warrants outstanding, their exercise price, and expiration dates as of December 31, 2023: Warrant Type Warrants Outstanding Exercise Price Expiration Date May 2020 Warrants 12,743 $ 562.50 5/20/2025 May 2020 Placement Agent Warrants 1,244 $ 703.13 5/20/2025 August 2020 Warrants 19,407 $ 437.50 8/3/2025 August 2020 Placement Agent Warrants 1,918 $ 546.88 7/30/2025 August 2021 Pharos Banker Warrants 1,484 $ 149.50 8/16/2026 February 2022 Series B Warrants 391,527 $ 14.00 2/4/2029 July 2022 Series C Warrants 284,020 $ 14.00 7/22/2027 January 2023 Series E Warrants 331,608 $ 4.00 3/21/2028 March 2023 Series F Warrants 4,999,093 $ 3.00 3/21/2025 March 2023 Series G Warrants 4,999,093 $ 3.00 3/21/2029 11,042,137 As of December 31, 2023, the warrants issued by the Company had a weighted average exercise price of $ 5.31 . Note 14 . Preferred Stock Series X Convertible Preferred Stock As described in Note 3, above, pursuant to the Merger Agreement, all Old Catheter common stock shares issued and outstanding and convertible promissory notes, representing an aggregate principal of $ 25.2 million, were converted into a right to receive 14,649.592 shares of a new class of the Company’s preferred stock, designated Series X Convertible Preferred Stock . Series X Convertible Preferred Stock has no voting rights prior to the conversion into common stock. While there are generally no voting rights of the Series X Convertible Preferred Stock, there are protective rights regarding the sales of the company, change of control, etc. No currently outstanding share of Series X Preferred may convert into common stock until on or after July 9, 2024, and then, only if the Company’s common stock has been delisted from the NYSE American or has been approved for initial listing on the NYSE American or another stock exchange, at a rate of 1,000 shares of common stock for each share of Series X Convertible Preferred Stock. F-33 Table of Contents Upon consummation of the merger, each holder of Old Catheter convertible promissory notes received, in exchange for discharge of the principal of his or its Notes, a number of shares of the Company's Series X Convertible Preferred Stock representing a potential right to convert into the Company's common stock in an amount equal to one common share for each $3.20 of principal amount . On March 21, 2023, the Company held the Stockholders’ Meeting, at which the stockholders approved, among other things, the issuance of 1,993,581 shares of common stock upon the conversion of 1,993 .581 of Series X Convertible Preferred Stock which were issued upon the closing of the Merger, see Note 3, Business Combination. On March 23, 2023, the Company issued 1,974,905 shares of common stock upon the conversion of 1,974 .905 of Series X Convertible Preferred Stock. On October 24, 2023, the remaining 18,676 shares of common stock were issued upon the conversion of 18.676 shares of Series X Convertible Preferred Stock. The remaining 12,656.011 shares of Series X Convertible Preferred Stock are expected to remain outstanding until at least July 9, 2024, and will convert thereafter up to 12,656,011 shares of common stock , only if the Company meets the initial listing standards of the NYSE American or another national securities exchange or is delisted from the NYSE American. Series A Convertible Preferred Stock As described in Note 13, on January 9, 2023, the Company entered into a Securities Purchase Agreement for a Private Placement, with the Investor. Pursuant to the Securities Purchase Agreement, shares of Series A Convertible Preferred Stock were issued, the conversion of which was approved at the Stockholders’ Meeting. The Series A Convertible Preferred Stock converts into common stock at the option of the holder at the Preferred Conversion Rate, subject to certain ownership limitations as described below. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. Subject to limited exceptions, holders of shares of Series A Convertible Preferred Stock will not have the right to convert any portion of their Series A Convertible Preferred Stock if the holder, together with its affiliates, would beneficially own in excess of 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to its conversion . Holders of Series A Convertible Preferred Stock will be entitled to receive dividends on shares of Series A Convertible Preferred Stock equal, on an as-if-converted-to-common stock basis, and in the same form as dividends actually paid on shares of the common stock. Except as otherwise required by law, the Series A Convertible Preferred Stock does not have voting rights. The Company also entered into a registration rights agreement with the purchasers requiring the Company to register the shares of common stock, issuable upon the conversion of the Series A Convertible Preferred Stock. The shares have been registered for resale on an effective registration statement on Form S-1. Note 15 . Stock-Based Compensation 2018 Equity Incentive Plan In September 2018, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2018 Equity Incentive Plan (the “2018 Plan”) which provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, performance-based stock awards and other forms of equity compensation to the Company’s employees, directors and consultants. Stock options granted under the 2018 Plan generally vest one-fourth on the first anniversary of the vesting commencement date with the balance vesting monthly over the remaining three years. Restricted stock units granted under the 2018 Plan generally vest one third on the first anniversary of the vesting commencement date and one sixth every six months thereafter such that the award will be fully vested on the third anniversary of the vesting commencement date. As of December 31, 2023 and December 31, 2022, 0 and 8,552 shares of common stock, respectively, were reserved for future issuance pursuant to the 2018 Plan. In July 2023, the 2018 Plan was replaced by the 2023 Plan, as defined below. As of July 2023, no additional awards could be made under the 2018 Plan. F-34 Table of Contents 2020 Inducement Equity Incentive Plan In March 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Plan”) for the purpose of attracting, retaining and incentivizing employees in furtherance of the Company’s success. The 2020 Plan was adopted without stockholder approval pursuant to Rule 303A.08 of the New York Stock Exchange. The 2020 Plan is used to offer equity awards as material inducements for new employees to join the Company. Upon adoption of the 2020 Plan, 640 shares of common stock were reserved for the granting of inducement stock options, restricted stock awards, restricted stock units and other forms of equity awards. As of December 31, 2023 and December 31, 2022, 540 shares of common stock and 181 shares of common stock, respectively, were reserved for future issuance under the 2020 Plan. 2023 Equity Incentive Plan In July 2023, the Company’s stockholders approved, the 2023 Equity Incentive Plan (the “2023 Plan”) which provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, performance-based stock awards and other forms of equity compensation to the Company’s employees, directors and consultants. Stock options granted under the 2023 Plan to employees and consultants generally will vest annually over a five-year period or as determined by the Board’s Compensation Committee, while grants to non-employee directors generally vest quarterly over a three-year period. As of December 31, 2023, 501,868 shares of common stock were reserved for future issuance pursuant to the 2023 Plan. The number of shares available for issuance under the 2023 Plan also includes a quarterly increase commencing on September 1, 2023 by an amount equal to the lesser of (i) 10 % of the number equal to the number of shares of common stock outstanding on the applicable adjustment date less the number of shares of common stock outstanding at the beginning of the fiscal quarter immediately preceding the adjustment date, but if such number is a negative number, then the increase will be zero; or (ii) such lesser number of shares as may be determined by the Board. As of December 31, 2023, no grants had been made under the 2023 Plan (see Note 20, Subsequent Events). Stock Options Assumed in Merger (See Note 3, Business Combination) At the closing of the Merger, each outstanding option to purchase Old Catheter common stock that had not previously been exercised prior to the closing of the Merger was assumed and converted into options to purchase 753,699 shares of the Company’s common stock (“Replacement Options”). Additionally, no Old Catheter options were amended in connection with the Merger. All the Replacement Options vested in accordance with the original terms of the grants in place at the time of the Merger. As a result, $ 3.4 million of purchase price consideration, which represented the estimated fair value of Old Catheter’s assumed stock options, and $ 1.1 million of stock-based compensation expense, which represents the excess of the estimated fair value of the Replacement Options over the assumed Old Catheter stock options, were recognized upon the closing of the Merger. The following is a summary of stock option activity for the year ended December 31, 2023: Stock Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2022 990 $ 11,405.30 Options assumed in Old Catheter Merger 753,699 $ 0.83 — — Options exercised ( 402,328 ) $ 0.59 — — Canceled/forfeited ( 137,709 ) $ 74.70 — — Outstanding at December 31, 2023 214,652 $ 6.47 6.38 $ — Vested and expected to vest at December 31, 2023 214,652 $ 6.47 6.38 $ — Exercisable at December 31, 2023 214,652 $ 6.47 6.38 $ — F-35 Table of Contents The Company did not grant any stock options during the year ended December 31, 2023. Restricted Stock Units The following is a summary of the restricted stock unit activity for the 2018 Plan for the year ended December 31, 2023: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2022 61 $ 450.46 Vested ( 26 ) $ 333.00 Forfeited ( 35 ) $ 537.71 Outstanding at December 31, 2023 — $ — Restricted Stock Awards A summary of the restricted stock award activity for the year ended December 31, 2023 is presented below: Restricted Stock Awards Weighted Average Grant Date Fair Value Outstanding at December 31, 2022 948 $ 248.48 Vested ( 503 ) $ 305.54 Forfeited ( 445 ) $ 183.98 Outstanding at December 31, 2023 — $ — Employee Stock Purchase Plan In September 2018, the Company’s board of directors adopted the 2018 Employee Stock Purchase Plan (the “ESPP”) which permitted eligible employees to purchase the Company’s common stock at a discount through payroll deductions during defined offering periods. Eligible employees could elect to withhold up to 15 % of their base earnings to purchase shares of the Company’s common stock at a price equal to 85 % of the fair market value on the first day of the offering period or the purchase date, whichever was lower. The number of shares of common stock reserved for issuance under the ESPP automatically increased on January 1 of each fiscal year by the lesser of (1) 237 shares, (2) 1.25 % of the total number of shares outstanding on December 31 of the preceding fiscal year, or (3) such other amount as the Company’s board of directors may determine. The Company paused the ESPP in May 2022. For the year ended December 31, 2022, cash received from the exercise of purchase rights under the ESPP was approximately $ 5 thousand. As of December 31, 2023, the Company had issued 950 shares of common stock since inception of the ESPP, and 26 shares were reserved for future issuance. Stock-based compensation expense recorded in operating expenses was as follows ($ in thousands): For the Year Ended December 31, 2023 2022 Selling, general and administrative $ 1,217 $ 387 Research and development — 60 Stock-based compensation in operating expenses $ 1,217 $ 447 Stock-based compensation of approximately $ 0 and $ 5 thousand was capitalized to property and equipment and inventory during the years ended December 31, 2023 and 2022, respectively. F-36 Table of Contents There was no unrecognized estimated stock-based compensation expense for stock options, restricted stock awards or restricted stock units at December 31, 2023. Note 16. Income Taxes A reconciliation of the differences between the U.S. statutory federal income tax rate and the effective tax rate as provided in the consolidated statements of operations is as follows: For the Year Ended December 31, 2023 2022 Tax computed at the federal statutory rate 21.0 % 21.0 % Section 382 NOL limitation — ( 42.6 )% Nondeductible expenses ( 0.2 )% ( 1.3 )% State income taxes, net of federal benefits ( 2.2 )% 0.2 % Stock-based compensation ( 6.4 )% — Other — 0.4 % Change in valuation allowance ( 16.7 )% 22.3 % Purchase accounting 20.5 % — Goodwill impairment ( 18.1 )% — Royalty mark to market 2.1 % — — — The federal and state income tax provision is summarized as follows (in thousands): For the Year Ended December 31, 2023 2022 Current Federal $ — $ — State — 3 — 3 Deferred Federal — — State — — — — Income tax expense $ — $ 3 Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes, and (b) operating losses and tax credit carryforwards. F-37 Table of Contents The tax effects of significant components of the Company’s deferred tax assets (liabilities) are as follows (in thousands): December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 24,829 $ 518 Stock-based compensation 49 5,162 Capitalized research and development 1,201 1,528 Reserves — 95 Intangible assets 53 35 Accrued legal settlement — 1,355 Operating lease liabilities 44 — Accrued compensation 2 — Other accruals — 1 R&D credits 589 — Total gross deferred tax assets 26,767 8,694 Deferred tax liabilities: Fixed asset basis ( 1 ) — Operating lease right-of-use assets ( 42 ) — Intangible assets ( 6,216 ) — Total gross deferred tax liabilities ( 6,259 ) — Valuation allowance ( 20,508 ) ( 8,694 ) Total deferred taxes $ — $ — At December 31, 2023, and December 31, 2022 the Company had available Federal Net Operating Loss (NOL) carryforwards of $ 147 million and $ 54.5 million, respectively. For State purposes, such NOL carryforwards were $ 111.7 million and $ 47.8 million, respectively. The net operating losses begin expiring in 2026 . Use of these NOL carryforwards may be significantly limited under the tax rules regarding the use of losses following an ownership change under Internal Revenue Code (“IRC”) Section 382. The Company experienced a change in control during 2020, 2021, 2022 and 2023. Accordingly, utilization of its respective consolidated and/or separately computed NOL's is subject to an annual limitation for federal tax purposes under Internal Revenue Code ("IRC") Section 382. Due to this change in control, the Company estimates that $51.9 million of $147 million federal NOL carryforward is effectively eliminated under IRC Section 382. Moreover, $40.8 million of its $111.7 million state NOL carry forward is also eliminated . As a result of these eliminations, the Company's federal and state NOLs were reduced to approximately $ 95.1 million and $ 70.9 million, respectively, before valuation allowance. The valuation allowance relates to deferred tax assets for certain items that will be deductible for income tax purposes under very limited circumstances and for which the Company believes it is not more likely than not that it will realize the associated tax benefit. However, in the event that the Company determines that it would be able to realize more or less than the recorded amount of net deferred tax assets, an adjustment to the deferred tax asset valuation allowance would be recorded in the period such a determination is made. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. Based upon the levels of historical taxable income, projections of future taxable income and the reversal of deferred tax liabilities over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the Company will not realize the benefits of these deductible differences, net of the existing valuation allowance. The amount of deferred tax asset considered realizable, however, could change in the near term if estimates which require significant judgment of future taxable income during the carryforward period are increased or decreased. F-38 Table of Contents The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. No amounts were recorded in 2023 and 2022. Effective January 1, 2023, repurchases of Company stock are subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations. There was no impact to the Company’s financial condition or results of operations in 2023 as a result of the excise tax. The Company files income tax returns as prescribed by tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions where applicable based on the statute of limitations that apply in each jurisdiction. The Company has no open income tax audits with any taxing authority as of December 31, 2023. The Company is still subject to income tax examinations by U.S. federal and state tax authorities for the years 2018 through 2022. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward amount. Note 17 . Commitments and Contingencies In the normal course of business, the Company is at times subject to pending and threatened legal actions. In management’s opinion, any potential loss resulting from the resolution of these matters will not have a material effect on the results of operations, financial position or cash flows of the Company. As of December 31, 2023, the Company had no outstanding litigation. Note 18 . Employee Benefit Plan In January 2019, the Company established a defined contribution plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”). Under the terms of the 401(k) Plan, all full-time employees were eligible to make voluntary contributions as a percentage or defined amount of compensation. The Company made matching contributions based on 100 % of each employee’s contribution up to 3 % and 50 % of contributions between 3 % and 5 %, with the match-eligible contribution limited to 4 % of the employee’s eligible compensation. The Company cancelled the 401(k) Plan effective March 10, 2023 and distributed all assets held by the 401(k) Plan to the participants. The Company had no expenses related to the matching contribution for the year ended December 31, 2023 and approximately $ 0.2 million for the year ended December 31, 2022. Note 19 . Related Parties Prior to the Merger, David A. Jenkins, the Company’s current Executive Chairman of the Board and Chief Executive Officer, and Old Catheter’s then Chairman of the Board of Directors, and his affiliates held approximately $ 25.1 million of Old Catheter’s Convertible Promissory Notes, or the Notes, that were converted in the Old Catheter merger into 7,856,251 shares of Series X Convertible Preferred Stock (see Note 3, Business Combination, and Note 14, Preferred Stock). In consideration for forgiving the interest accrued but remaining unpaid under the Notes in an aggregate amount of approximately $ 13.9 million, Mr. Jenkins and his affiliates also received royalty rights equal to approximately 12% of the net sales, if any, of LockeT, commencing upon the first commercial sale and through December 31, 2035 (see Note 10, Royalties Payable). In addition to the shares described above that were issued in connection with the Notes, Mr. Jenkins and his affiliates received 1,325.838 shares of Series X Convertible Preferred Stock in the merger, and Mr. Jenkins’ adult children received 1,284.344 shares of Series X Convertible Preferred Stock in the merger, all in exchange for their equity interests in Old Catheter in accordance with the merger exchange ratio . In connection with the Merger (see Note 3, Business Combination), the Company assumed $ 1.4 million of accrued expenses and advances, of which $ 1.1 million was due to Mr. Jenkins and was paid on January 10, 2023. F-39 Table of Contents Mr. Jenkins’ daughter, the Company’s non-executive Chief Operating Officer, received options to purchase 144,169 shares of the Company’s common stock upon the closing of the merger in exchange for her options to purchase shares of Old Catheter common stock, converted based on the exchange ratio in the merger. Of the total options to purchase 144,169 shares of the Company’s common stock, 140,816 options have an exercise price of $ 0.59 per share, and the remaining 3,353 options have an exercise price of $ 2.02 per share. Following stockholder approval on March 21, 2023, the Company issued 991,828 shares of common stock to Mr. Jenkins and affiliates upon conversion of 991.828 shares of Series X Convertible Preferred Stock, and 235,320 shares of common stock to his adult children upon conversion of 235.320 shares of Series X Convertible Preferred Stock . Note 20 . Subsequent Events Issuance of Securities in Private Placement On January 24, 2024, Catheter Precision, Inc. issued 546,776 shares of its common stock in connection with the conversion of 875 shares of its outstanding Series A Convertible Preferred Stock. The conversion occurred on January 23, 2024. Each share of Series A Convertible Preferred Stock is convertible into approximately 625 shares of common stock. The common stock was issued pursuant to the exemption contained in Section 3(a)(9) of the Securities Act of 1933, as amended (the "Act"), which applies to transactions in which a security is exchanged by an issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. The shares issued have been registered for resale on an effective registration statement on Form S-1. Options Issued Under 2023 Equity Incentive Plan On January 8, 2024, the Board approved the issuance of a total of 285,000 non-qualified stock options under the 2023 Equity Incentive Plan. 75,000 of these non-qualified options were issued to non-employee directors that vest at 8 1/3% per quarter for 3 years with an exercise price of $0.40 and expiration date of January 8, 2034 . The remaining 210,000 non-qualified options were issued to employees and consultants and vest at 20% per year for 5 years with an exercise price of $0.40 and expiration date of January 8, 2034 . On February 26, 2024, the Board approved the issuance of a total of 150,000 incentive stock options under the 2023 Equity Incentive Plan. All options were issued to employees and vest at 20% per year for 5 years with an exercise price of $0.43 and expiration date of February 26, 2034 . F-40