10-Q: Catheter Precision Faces Going Concern Doubt Amid Q3 Losses

Catheter Precision reported increased Q3 2025 revenues driven by LockeT sales but faces substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flows.

Summary

• Revenues for the three months ended September 30, 2025, increased to $226,000 from $96,000 in the prior year, primarily driven by LockeT and VIVO System sales.
• Revenues for the nine months ended September 30, 2025, increased to $581,000 from $271,000 in the prior year, mainly due to LockeT sales.
• The net loss for the three months ended September 30, 2025, improved to $(2.344) million from $(4.120) million in the prior year.
• The net loss for the nine months ended September 30, 2025, worsened to $(11.847) million from $(11.015) million in the prior year.
• As of September 30, 2025, the company had $1.075 million in cash and cash equivalents, an accumulated deficit of $303.8 million, and a working capital deficit of $2.9 million.
• Net cash used in operating activities for the nine months ended September 30, 2025, was $(6.784) million.
• Management has concluded there is substantial doubt about the company's ability to continue as a going concern for a period of one year after the report's issuance date.
• The company completed a 1-for-19 reverse stock split effective August 15, 2025, and increased its authorized common stock to 500 million shares, effective October 17, 2025.
• New subsidiaries, Cardionomix and KardioNav, were formed to develop novel cardiac technologies, including the CPNS System for heart failure and advanced electrophysiology mapping.
• Material weaknesses in internal control over financial reporting were identified, including a lack of segregation of duties and insufficient review controls.

Sentiment

Score: 3

Explanation: While there's revenue growth for LockeT and strategic moves into new R&D areas, the severe liquidity issues, recurring losses, negative cash flow, and explicit going concern warning overshadow these positives. The identified material weaknesses in internal controls further add to the negative sentiment.

Positives

• Q3 2025 revenues increased by $130,000 (135%) to $226,000 compared to Q3 2024.
• Nine-month revenues increased by $310,000 (114%) to $581,000 compared to the prior year, primarily driven by LockeT sales.
• LockeT sales significantly increased by $322,000 for the nine months ended September 30, 2025, due to successful sales team efforts and new hospital contracts.
• LockeT received a U.S. patent grant in April 2025 and CE Mark approval in April 2025, enabling expanded international sales.
• New distribution agreements for LockeT were signed in the United Kingdom, Italy, Spain, Portugal, Switzerland, the Middle East, South Africa, and Brunei.
• Net loss for the three months ended September 30, 2025, improved by $1.776 million compared to the same period in the prior year.
• The company successfully raised $1.5 million in cash and acquired $864,000 in trading debt securities through the May 2025 PIPE Financing.
• An At-the-Market (ATM) Offering generated $4.0 million in gross proceeds through September 30, 2025, with an increased capacity to $4.3 million.
• Formation of new subsidiaries, Cardionomix and KardioNav, to pursue development of novel cardiac technologies (CPNS System and advanced EP mapping).
• Research and development activities for KardioNav's new cardiac technology commenced in animals and humans in September 2025.

Negatives

• The company incurred a net loss of $(11.847) million for the nine months ended September 30, 2025, which is an increase from $(11.015) million in the prior year.
• Net cash used in operating activities was $(6.784) million for the nine months ended September 30, 2025.
• The company has an accumulated deficit of $303.8 million and a working capital deficit of $2.9 million as of September 30, 2025.
• Cash and cash equivalents decreased to $1.075 million as of September 30, 2025, from $2.873 million at December 31, 2024.
• Management estimates current cash on hand ($377,000 as of November 5, 2025) is insufficient to fund operations through the end of Q4 2025.
• VIVO System sales decreased by $12,000 for the nine months ended September 30, 2025, primarily due to reduced sales efforts and a key EU-based sales consultant's prolonged medical leave.
• The QHSLab Notes, classified as trading debt securities with a fair value of $981,000, are in default, with no assurance of full payment.
• Significant related party notes payable totaling $1.7 million are due by January 31, 2026, with an interest rate of 12% per annum.
• KardioNav issued $300,000 in short-term promissory notes to the CEO and a CEO-controlled company, due July 11, 2026.
• The company expensed $1.9 million in acquired in-process research and development (IPR&D) expenses for the nine months ended September 30, 2025, as the acquired assets had no alternative future use.
• The balance sheet shows $177,000 in short-term notes payable as of September 30, 2025, despite a statement that the related loan was paid off in July 2025.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern for the next 12 months due to recurring net losses and negative cash flows.
• Inability to secure additional financing in a timely manner or on favorable terms could lead to potential reduction or suspension of operations, or significant dilution for existing stockholders.
• The common stock may be subject to extreme market volatility and trading patterns unrelated to operating performance or macro/industry fundamentals.
• The operating business has a history of losses, is expected to incur additional losses, and may never achieve profitability.
• Identified material weaknesses in internal control over financial reporting (lack of segregation of duties, insufficient review controls, issues with service provider oversight) could adversely affect financial reporting accuracy and timeliness.
• Inability to obtain necessary FDA registrations and approvals for products in development, particularly for Cardionomix and KardioNav subsidiaries.
• Anticipated clinical trials may not yield expected results, may be more costly than anticipated, or may be abandoned due to lack of financing or changes in business focus.
• Reliance on a few customers for a significant portion of revenues and a few vendors for accounts payable creates concentration risk.
• If hospitals, physicians, and patients do not accept current and future products, the company may be unable to generate significant operating revenue.
• Inability to obtain and maintain patent protection for products could allow competitors to develop similar technologies, adversely affecting commercialization.
• Significant financial dealings and dependence on the CEO and his affiliates for financing pose related party risks.
• Any assets liquidated to meet urgent liquidity needs may produce proceeds less than their market or stated value.

Future Outlook

The company expects operating losses and negative cash flows to continue for the foreseeable future. It needs to raise additional capital through public or private equity or debt financing, or other innovative strategies like crypto asset treasury policy, to fund operations for at least the next 12 months. There is no guarantee such financing will be secured timely or on favorable terms, and existing stockholders may face significant dilution. The company is committed to aggressive and creative pursuit of financing and strategic transactions, including potential mergers or acquisitions. It aims to establish its products as integral tools in cardiac electrophysiology by reducing procedure time, patient complications, and increasing procedural success.

Management Comments

• "Management expects operating losses and negative cash flows to continue for the foreseeable future."
• "Management estimates that based on the Company's liquidity resources and currently anticipated expenses, if it is unable to secure additional financing it will be unable to fund planned expenditures and meet obligations through the end of the fourth quarter 2025."
• "Management plans to raise additional capital through public or private equity or debt financing, or other innovative and specialty finance strategies such as crypto asset treasury policy, in order to fulfill its operating and capital requirements for at least 12 months from the date of the issuance of the unaudited condensed consolidated financial statements."
• "The Company remains committed to the aggressive and creative pursuit of financing, despite great challenges to securing capital on our preferred terms."
• "Management believes that the Financial Statements and related financial information included in this Quarterly Report fairly present, in all material respects, our balance sheets, statements of operations, shareholders equity and cash flows as of and for the periods presented."

Industry Context

The company operates in the highly competitive cardiac electrophysiology and medical device industry, focusing on innovative technologies like 3D cardiac mapping (VIVO) and suture retention (LockeT). Its strategy involves expanding product uses and developing new technologies through subsidiaries like Cardionomix (heart failure treatment) and KardioNav (advanced EP mapping). The industry is characterized by significant R&D investment, stringent regulatory approvals (FDA, CE Mark), and the need for substantial capital to fund development and commercialization. The company's efforts to secure patents and CE Marks for LockeT align with industry trends for market expansion, but its ongoing 'going concern' warning highlights the intense financial pressures faced by many development-stage medical technology firms.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• No outstanding litigation as of September 30, 2025.

Related Party Transactions

• David A. Jenkins (Executive Chairman/CEO) and his affiliates hold approximately 9,239.285 shares of Series X Preferred Stock.
• The company is obligated to pay David A. Jenkins and his affiliates a 12% royalty on net sales of the LockeT device through December 31, 2035, in exchange for forgiving $13.9 million in accrued interest on prior convertible promissory notes.
• The company has $1.7 million in short-term promissory notes payable to David Jenkins and his affiliates (Fatboy Capital, Jenkins Family Charitable Institute), due January 31, 2026, with a 12% annual interest rate.
• KardioNav, a subsidiary, issued two $150,000 short-term promissory notes (total $300,000) to David Jenkins and Lifestim, Inc. (a company controlled by David Jenkins), due July 11, 2026, with a 4.2% annual interest rate.
• Auston Locke (son of Robert Locke, VP of Product Development) is entitled to a royalty on LockeT sales (5% up to $1 million, then 2% up to $10 million after US patent grant).
• The Jenkins Family Charitable Institute invested $500,000 in the September 2024 public offering and received common stock and warrants.
• Philip Anderson (CFO) received a non-plan option to purchase 26,315 shares of common stock on January 6, 2025.
• David Jenkins and his affiliates hold 12% of Cardionomix common stock and 10% of KardioNav common stock.

Stakeholder Impact

• Shareholders face significant dilution risk from future capital raises and the recent increase in authorized common stock. The 'going concern' warning indicates a high risk of investment loss. The reverse stock split may temporarily boost share price but does not address underlying financial health.
• Employees may experience job insecurity due to the company's financial distress and the termination of employees without replacement. Stock-based compensation may be impacted by share price volatility and the company's financial performance.
• Customers may face risks regarding the continued availability of VIVO and LockeT products if the company cannot secure sufficient financing to sustain operations.
• Creditors face risk of non-payment, especially for related party notes, given the company's liquidity issues and going concern warning.
• Suppliers may experience delayed or non-payment if liquidity issues persist.

Next Steps

• Secure additional financing through public or private equity or debt, or other innovative strategies.
• Continue clinical studies for LockeT to demonstrate effectiveness and benefits, and expand indications for use with the FDA.
• Advance development and commercialization of the CPNS System through Cardionomix.
• Integrate VIVO mapping intellectual property with Chelak's patents to develop a new system for improved pre-ablation mapping through KardioNav.
• Remediate identified material weaknesses in internal control over financial reporting, including assessing the need to expand accounting/finance teams and establishing robust review policies.
• Monitor NYSE American listing requirements to avoid delisting.

Key Dates

Recommendation

The company explicitly states 'substantial doubt about the Company's ability to continue as a going concern' and that its current cash on hand is insufficient to fund operations through the end of Q4 2025. Despite some revenue growth in specific products, the overall net loss is increasing, and cash burn from operations remains high. The reliance on related party financing, the default status of QHSLab Notes, and identified material weaknesses in internal controls further compound the severe financial distress. While the company is exploring various financing options, the uncertainty of securing such funds on favorable terms, coupled with the high risk of dilution, makes the stock a strong sell for investors.

Keywords

Cardiac Electrophysiology, Medical Devices, VIVO System, LockeT Device, Heart Failure Treatment, Cardiac Mapping, Suture Retention Device, SEC Filing, 10-Q Report, Going Concern, Capital Raise, Biotechnology, Healthcare Technology, Cardionomix, KardioNav, Reverse Stock Split, Internal Controls, Related Party Transactions