DEF: Catheter Precision Seeks Shareholder Approval for Major Capital Raises and Reverse Stock Split Amidst Listing Concerns

Catheter Precision, Inc. is calling an Annual Meeting to approve significant common stock issuances for warrant exercises and preferred stock conversion, alongside a reverse stock split to address NYSE American listing requirements, signaling ongoing financial challenges and a need for substantial capital.

Summary

• Catheter Precision, Inc. will hold its Annual Meeting on July 25, 2025, to vote on six key proposals, including the election of a Class I director and the ratification of its independent accounting firm.
• Shareholders are asked to approve the issuance of up to 4,285,716 shares of common stock upon exercise of Series L Common Stock Purchase Warrants at $0.50 per share.
• Approval is also sought for the issuance of up to 8,574,000 shares of common stock upon conversion of Series B Convertible Preferred Stock, with a stated value of $1,000 per share.
• The company also seeks approval for the issuance of up to 257,143 shares of common stock upon exercise of 2025 Placement Agent Common Stock Purchase Warrants at $0.5425 per share.
• These share issuances require shareholder approval under NYSE American Company Guide Section 713(a) as they collectively exceed 20% of outstanding common stock and are priced below market.
• A reverse stock split proposal, with a ratio between 1-for-5 and 1-for-19, is on the agenda, primarily to increase the per-share price and maintain NYSE American listing compliance, as the stock has traded below $1.00 since August 30, 2024.
• The company reported a net loss of $16,643,000 for the fiscal year ended December 31, 2024, an improvement from a $70,572,000 net loss in 2023.
• The May 12, 2025 Purchase Agreement, which includes the Series B Preferred Stock and Series L Warrants, provided $1.5 million in cash and certain convertible notes from QHSLab, Inc., which are currently in default and have an uncertain valuation of approximately $1.6 million.
• The company has engaged in multiple capital-raising activities, including a $3.7 million gross proceeds from a 2024 Warrant Inducement Offer and a $3.6 million gross proceeds from a September 2024 public offering.
• Related party loans totaling $1.5 million from CEO David A. Jenkins and his affiliates were extended to January 31, 2026, with an increased interest rate of 12% from August 31, 2024.
• The company recently acquired assets of Cardionomic, Inc. for a $1.5 million promissory note, with plans to raise additional funds for its development, which may dilute the company's ownership in the subsidiary.

Sentiment

Score: 3

Explanation: The document outlines significant financial challenges, including the need for a reverse stock split to maintain listing, substantial potential dilution from capital raises, and reliance on related party financing. While there's a positive trend in reducing net loss and pursuing new technologies, the overall financial health appears precarious, indicating high risk for investors.

Positives

• The company is actively pursuing development and commercialization of novel electrophysiology technologies and solutions, indicating a focus on growth and innovation.
• The acquisition of Cardionomic, Inc. assets for a late-stage treatment for acute decompensated heart failure expands the company's potential market and product pipeline.
• Net loss significantly decreased from $70,572,000 in 2023 to $16,643,000 in 2024, indicating an improvement in financial performance.
• The Board of Directors believes the proposed capital raises and reverse stock split are in the best interests of the Company and its stockholders, aiming to improve market attractiveness and financing capabilities.

Negatives

• The proposed issuance of up to 13,116,859 shares (4,285,716 Series L Warrants + 8,574,000 Series B Preferred + 257,143 Placement Agent Warrants) represents significant potential dilution to existing common stockholders.
• The company's common stock has traded below $1.00 since August 30, 2024, and was $0.2051 on June 5, 2025, necessitating a reverse stock split to maintain NYSE American listing, which often signals underlying financial distress.
• A portion of the consideration for the May 12, 2025 Purchase Agreement included convertible notes from QHSLab, Inc. valued at approximately $1.6 million, which are currently in default and have uncertain valuation.
• There is no assurance that the proposed reverse stock split will increase or maintain the stock price, or that the total market capitalization will not decrease.
• The reverse stock split may decrease the liquidity of the common stock and result in higher transaction costs for stockholders holding odd lots.
• The reverse stock split will result in a significant increase in authorized but unissued common stock relative to outstanding shares, potentially leading to further dilution without additional stockholder approval.
• The company continues to incur substantial net losses, with a loss of $16,643,000 in 2024.
• The company relies on related party loans from its CEO and his affiliates, totaling $1.5 million, with extended maturity dates and increased interest rates, indicating ongoing capital needs and potential financial strain.
• The newly formed Cardionomix, Inc. has no significant assets other than the recently acquired assets and will require additional funding for development, which is likely to dilute the company's ownership interest.
• One late Form 3 filing was noted for Andrew Arno, a director, indicating a minor compliance lapse.

Risks

• Failure to obtain stockholder approval for the Series L Warrant exercise, Preferred Conversion, and Placement Agent Warrant exercise proposals may discourage future investors and make it difficult for the company to secure alternative capital sources on favorable terms or at all.
• The exercise and conversion of the proposed warrants and preferred stock will result in substantial dilution to the ownership percentage of current stockholders.
• The QHSLab, Inc. convertible notes, part of the recent financing, are in default, and their full payment or valuation is uncertain, posing a risk to the company's expected proceeds.
• There is no guarantee that the reverse stock split will achieve its intended purpose of increasing the per-share market price or maintaining NYSE American listing, and the stock price could decline further.
• The reverse stock split could negatively impact the liquidity of the common stock and increase transaction costs for investors, particularly those with odd lots.
• The increased proportion of authorized but unissued shares post-reverse split could be used to oppose hostile takeover attempts or dilute the voting power of existing stockholders without further approval.
• The company faces the risk of delisting from the NYSE American if its stock price does not meet listing requirements, which could adversely affect liquidity and investor interest.
• Cardionomix, Inc. will need to raise significant funds for the development of its newly acquired assets, and there is no assurance that such funds can be raised on a timely basis or without further diluting Catheter Precision's ownership.

Future Outlook

The company intends to use any net proceeds from warrant exercises to advance the development and commercialization of its novel electrophysiology technologies and solutions, as well as for general corporate purposes. The newly acquired Cardionomix, Inc. assets will require additional funding for development, which is expected to entail further security issuances and potential dilution of the company's ownership interest.

Management Comments

• "Thank you for your ongoing support of, and continued interest in, Catheter Precision, Inc."

Industry Context

Catheter Precision operates within the medical device industry, specializing in electrophysiology technologies. The recent acquisition of Cardionomic, Inc. assets indicates an expansion into the treatment of acute decompensated heart failure. The company's frequent capital raises, including reliance on related party financing, and the necessity of a reverse stock split to maintain listing, reflect common challenges faced by smaller, emerging growth companies in the capital-intensive medical device sector, particularly those in R&D and early commercialization phases.

Management Changes

Corporate Governance

Related Party Transactions

• Missiaen Huck, CEO David Jenkins' adult daughter, is employed as non-executive Chief Operating Officer with an annual compensation of $165,000, and has received stock options.
• In January 2023, David Jenkins and his affiliates converted approximately $25.1 million of Old Catheter's Convertible Promissory Notes into Series X Preferred Stock during the merger. They also received 11.77% royalties on LockeT device net sales through December 31, 2035, in exchange for forgiving approximately $13.9 million in accrued interest.
• David Jenkins and his affiliates received additional Series X Preferred Stock for their equity interests in Old Catheter during the merger, and Mr. Jenkins' adult children received 1,284.344 shares of Series X Preferred Stock.
• Noninterest-bearing demand loans totaling $1,075,000 from David Jenkins to Old Catheter were repaid by the company at or shortly after the merger closing.
• Armistice Capital Master Fund Ltd., a beneficial owner of over 5% of common stock, participated in the January 9, 2023 Warrant Inducement Offer and Private Placement, and purchased $1.5 million worth of units in the September 2024 Public Offering.
• The Jenkins Family Charitable Institute, a beneficial owner of over 5% of common stock whose trustee is CEO David Jenkins' adult daughter, had 1,000,000 Series H and I Warrants repriced to $0.70/share in the 2024 Warrant Inducement Offer.
• The Jenkins Family Charitable Institute exercised 235,000 Prefunded Warrants in October 2025 after the Audit Committee authorized a waiver of the beneficial ownership blocker.
• David A. Jenkins, FatBoy Capital, L.P. (controlled by Mr. Jenkins), and the Jenkins Family Charitable Institute provided $1.5 million in short-term promissory notes to the company between May and July 2024. These notes were amended on August 23, 2024, to extend maturity to January 31, 2026, and increase the interest rate to 12%.
• In February 2025, upon forming Cardionomix, Inc. to acquire assets of Cardionomic, Inc., David Jenkins, FatBoy, and certain business associates received minority interests (5%, 7%, and 6% respectively) in Cardionomix for bringing the business opportunity to the company.

Stakeholder Impact

• Shareholders face significant potential dilution from the proposed issuance of common stock upon warrant exercises and preferred stock conversion, which could reduce their percentage ownership.
• The proposed reverse stock split, while intended to maintain NYSE American listing, carries the risk of further stock price decline or reduced liquidity, potentially impacting shareholder value.
• The company's reliance on related party loans and the default status of certain notes acquired in recent financing may raise concerns among creditors regarding the company's financial stability and ability to meet obligations.
• Employees, particularly executive officers, are subject to compensation policies that include equity awards, aligning their incentives with company performance, but the overall financial challenges could impact job security or future compensation growth.

Next Steps

• Hold the Annual Meeting of Stockholders on July 25, 2025, to vote on the proposed resolutions.
• If approved, the Board of Directors will determine the exact ratio and timing for effecting the reverse stock split.
• If stockholder approval for warrant exercises and preferred conversion is not obtained, the company is required to hold another meeting within 90 days to seek approval again.
• Cardionomix, Inc. will need to raise funds to develop the newly acquired assets, which may involve issuing additional securities.

Key Dates

Recommendation

Keywords

Catheter Precision, VTAK, SEC filing, Proxy Statement, DEF 14A, Reverse Stock Split, Warrants, Convertible Preferred Stock, Capital Raise, Dilution, NYSE American, Listing Compliance, Medical Device, Electrophysiology, Heart Failure Treatment, Corporate Governance, Related Party Transactions, Shareholder Meeting