Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to risks and uncertainties. Forward-looking statements are often identified by the use of words such as, but not limited to, "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "will," "plan," "project," "seek," "should," "target," "will," "would," and similar expressions or variations intended to identify forward-looking statements. All statements, other than statements of historical facts, regarding management's expectations, beliefs, goals, plans or Catheter Precision's prospects should be considered forward-looking statements. Readers are cautioned that actual results may differ materially from projections or estimates due to a variety of important factors, and readers are directed to the Risk Factors identified in Catheter Precision's filings with the SEC, including its most recent Annual Report on Form 10-K, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from Catheter Precision. Catheter Precision may not actually achieve the goals or plans described in its forward-looking statements, and such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Investors should not place undue reliance on these statements. Catheter Precision assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Actual outcomes or results may differ from anticipated results, sometimes materially. Factors that could cause actual results to differ include, but are not limited to: the ability of the combined company to achieve the identified synergies; the ability to integrate the FLYTE business into Catheter Precision and realize the anticipated strategic benefits of the transaction within the expected time-frames or at all; that such integration may be more difficult, time-consuming or costly than expected; that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers or suppliers) may be greater than expected following the closing of the transaction; the retention of certain key employees of FLYTE; the expected benefits and success of FLYTE's business model; general economic conditions that are less favorable than expected; geopolitical developments and additional changes in international trade policies and relations, including tariffs; and the ability of our products and product candidates to compete effectively against current and future competitors.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including, but not limited to, those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025, as well as those described below. To the extent that any risk factor set forth below is inconsistent with or expands upon a risk factor set forth in the 10-K, the risk factor described below supersedes the prior disclosure. These risks include, but are not limited to, that: if we pursue a strategic transaction, such as FLYTE acquisition, it may change the primary focus of our business, and our management team could be diverted from pursuing our present core business and from obtaining regulatory approval for our products in development; we will be unable to develop the assets acquired in by KardioNav and Cardionomix unless we are able to obtain additional financing in sufficient amounts to fund our current business, any future businesses we may enter into and to fund our products in development, which financing may not be available on acceptable terms or at all, and could require significant changes in our management and business focus, the results of anticipated trials may not turn out as we currently expect and future trials may not occur on the time tables we expect or may be more costly than anticipated, or may be abandoned due to lack of financing or changes in our business focus, we will be required to raise additional funds to finance our operations and continue as a going concern , and we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us or could require changes to governance or operations, and we may require additional funds sooner than our current expectations and we may be required to significantly dilute our existing stockholders in order to raise sufficient operating funds assuming that we are able to raise funds at all, which is uncertain; our stockholder equity is near the minimum level prescribed by the NYSE American and if we are unable to maintain minimum listing requirements, we are liable to be delisted from the NYSE American; our common stock may be subject to extreme market volatility and trading patterns and may experience rapid and substantial increases or decreases unrelated to our operating performance or prospects, or macro or industry fundamentals, which could occur for a number of reasons including but not limited to analyst recommendations, changes in our industry or the overall markets, significant acquisitions or other strategic transactions by or involving us or our subsidiaries, among other reasons; our operating business has a history of losses, is expected to incur additional losses, and may never achieve profitability; our past performance may not be a reliable indicator of future performance, including but not limited to in the event of a strategic transaction; historical trends should not be used to anticipate results or trends in future periods; our ability to increase our at-the-market offering availability in the future is subject to obtaining necessary approvals, certifications, legal opinions and accounting comfort letters, and there is no guaranty that we can do so successfully; we have previously identified material weaknesses in our internal control over financial reporting and, if these or other material weaknesses occur again, they could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner; compliance with Sarbanes-Oxley Act Section 404 could have a material adverse impact on our business; we will not be able to reach profitability unless we are able to achieve our product expansion and growth goals or engage in a strategic transaction which realigns our business focus; our VIVO launch plans require significant investment in infrastructure and sales representatives; our research and development and commercialization efforts may depend on entering into agreements with corporate collaborators; we have entered into joint marketing agreements with respect to our products, and may enter into additional joint marketing agreements, that will reduce our revenues from product sales; royalty agreements with respect to LockeT, the surgical vessel closing pressure device, will reduce any future profits from this product; if we experience significant disruptions in our information technology systems, our business may be adversely affected; litigation and other legal proceedings may adversely affect our business; if we make acquisitions or divestitures, we could encounter difficulties that harm our business, and entering into a strategic transaction could materially alter our business model and focus; failure to attract and retain sufficient qualified personnel could also impede our growth; our revenues may depend on our customers' receipt of adequate reimbursement from private insurers and government sponsored healthcare programs; we may be unable to compete successfully with companies in our highly competitive industry, many of whom have substantially greater resources than we do; our future operating results depend upon our ability to obtain components in sufficient quantities on commercially reasonable terms or according to schedules, prices, quality and volumes that are acceptable to us, and suppliers may fail to deliver components, or we may be unable to manage these components effectively or obtain these components on such terms; if hospitals, physicians and patients do not accept our current and future products or if the market for indications for which any product candidate is approved is smaller than expected, we may be unable to generate significant operating revenue, if any; a variety of risks associated with marketing our products internationally could materially adversely affect our business; the impact of the military conflicts in Ukraine and Israel, and the actions that have been and could be taken by other countries, including new and stricter sanctions and actions taken in response to such sanctions, have affected, and may continue to affect, our business and results of operations, including our supply chain; if the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates; we may be adversely affected by product liability claims, unfavorable court decisions or legal settlements; our ability to use our net operating loss carryforwards may be limited; we are subject to pervasive and continuing regulation by the FDA and other regulatory agencies; our products may be subject to additional recalls, revocations or suspensions after receiving FDA or foreign approval or clearance, which could divert managerial and financial resources, harm our reputation, and adversely affect our business; changes in trade policies among the United States ("U.S.") and other countries, in particular the imposition of new or higher tariffs, could place pressure on our average selling prices as our customers seek to offset the impact of increased tariffs on their own products; increased tariffs or the imposition of other barriers to international trade could have a material adverse effect on our revenues and operating results; product clearances and approvals can often be denied or significantly delayed, although we have obtained regulatory clearance for our VIVO and LockeT products in the U.S. and certain non-U.S. jurisdictions; our current business plans for our current operating business include expanding uses for our products, which if implemented would require additional clearances; even after clearance is obtained, our products remain subject to extensive regulatory scrutiny; reductions in staffing and funding at FDA and other federal agencies could cause delays in the development and approval of our products; our business may be adversely affected by changes and uncertainty in the health care industry including health care public-policy developments; if we or our suppliers fail to comply with the FDA's Quality System Regulation, or QSR, or any applicable state equivalent, our operations could be interrupted, and our potential product sales and operating results could suffer; if any of our products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be required to report under applicable medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions; healthcare reform initiatives and other administrative and legislative proposals may adversely affect our business, financial condition, results of operations and cash flows in our key markets; if we are unable to obtain and maintain patent protection for our products, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our existing products and any products we may develop, and our technology may be adversely affected; and any short-term sale may produce proceeds that are less than the market or stated value of such assets and less than the proceeds that could have been obtained if they were liquidated in the ordinary course. If we enter into a strategic transaction, such as a merger or acquisition, we may become subject to additional risks in addition to those described above, which risks would be identified and disclosed in conjunction with consummating any such transaction. There is no guarantee that we will be able to identify and enter into any such strategic transaction.

The forward-looking statements in this report and identified above reflect our beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report and are subject to risks and uncertainties including those described in the cautionary statements above. Given these risks and uncertainties, you should not place undue reliance on the forward-looking statements. We qualify all of the forward-looking statements in this Quarterly Report by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

This Quarterly Report also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.

References to "we", "us", "our", "Catheter" and "the Company" refer to Catheter Precision, Inc.

Overview

Catheter Precision, Inc. was incorporated in California on September 4, 2002, and reincorporated in Delaware in July 2018. Catheter was initially formed to develop, commercialize, and market its advanced excimer laser-based platform for use in the treatment of vascular and dermatological immune-mediated inflammatory diseases. On January 9, 2023, we merged with the former Catheter Precision, Inc. ("Old Catheter"), a privately held Delaware corporation (the "Merger"), which became our wholly owned subsidiary. Historically, our activities primarily relate to Old Catheter's historical business, which comprises the design, manufacture and sale of new and innovative medical technologies focused in the field of cardiac electrophysiology ("EP").

On February 17, 2025, we formed a new subsidiary, Cardionomix, Inc. ("Cardionomix"), to acquire certain assets previously held by Cardionomic, Inc. ("Cardionomic"), a third-party entity that had ceased operations. We own 82% of Cardionomix's issued and outstanding common stock. Our Chief Executive Officer and Chairman of the Board and certain of his affiliates own 12%, while the remaining 6% of the outstanding common stock was issued to certain third parties as finder's fees for the asset acquisition (see Note 2, Summary of Significant Accounting Policies in the audited consolidated financial statements included elsewhere in this Annual Report). On May 5, 2025, Cardionomix acquired certain assets primarily related to the Cardiac Pulmonary Nerve Stimulation ("CPNS") System previously held by Cardionomic (see Note 14, Asset Acquisition in the audited consolidated financial statements included elsewhere in this Annual Report). The CPNS System is a novel technology for the late-stage treatment of acute decompensated heart failure by stimulating the autonomic cardiac nerves to restore autonomic balance. Unless Cardionomix can obtain its own dedicated financing, the Company does not intend to allocate capital to fund the clinical development of the acquired assets.

On June 20, 2025, we formed a new subsidiary, KardioNav, Inc. ("KardioNav"), to pursue the advancement, development, and commercialization of certain intellectual property assigned to KardioNav. We transferred certain intellectual property related to the View into Ventricular Onset System ("VIVO" or "VIVO System") to KardioNav, while Chelak iECG, Inc. ("Chelak"), an unrelated third party, transferred certain patents related to a medical device designed to interface with implanted cardiac devices to KardioNav. KardioNav intends to integrate the VIVO mapping intellectual property with Chelak's assigned patents to develop a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue. Research and development activities in animals and humans have begun. We own 57% of the subsidiary's issued and outstanding common stock, while Chelak owns 33% of the subsidiary's issued and outstanding common stock. Our Chief Executive Officer and Chairman of the Board of Directors and certain of his affiliates own the remaining 10% of the subsidiary's issued and outstanding common stock. KardioNav obtained its own financing in 2025. The Company does not intend to provide additional financial support to KardioNav. See Note 2, Summary of Significant Accounting Policies in the audited consolidated financial statements included elsewhere in this Quarterly Report.

One of our two primary products is the VIVO System, which is a non-invasive imaging system that offers 3D cardiac mapping to help with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to EP procedures.

We have received FDA clearance to market and promote the VIVO System in the U.S. as a pre-procedure planning tool for patients with structurally normal hearts undergoing ablation treatment for idiopathic ventricular arrhythmias. VIVO allows for the acquisition, analysis, display and storage of cardiac electrophysiological data and maps for analysis by a physician. To date, VIVO has been utilized in more than 1,000 procedures in the U.S. and EU by over 30 physicians, with no reported device-related complications.

We have been cleared to label the VIVO System with the CE Mark in the EU and certain other countries. The CE Mark designation, which affirms the product's conformity with European health, safety, and environmental protection standards, allows us to market that product in countries that are members of the EU and the European Free Trade Association. Catheter has commenced limited sales of the VIVO System in Europe and the UK through independent distributors. Catheter's international distributors are supported by two EU-based full-time consultants.

Our second and newest primary product, LockeT® ("LockeT"), is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure. LockeT is intended to temporarily secure sutures and aid clinicians in locating and removing sutures efficiently. LockeT is a sterile Class I product that was registered with the FDA in the U.S. We recognized our first sale of LockeT in May 2024. In September 2024, we received notification of the issuance of our first LockeT patent in the country of China and we also completed a Middle East distribution agreement for LockeT.

In April 2025, we received notification of the issuance of our first LockeT patent in the U.S. by the United States Patent and Trademark Office. We also obtained the CE Mark approval for LockeT, permitting the marketing and sale of LockeT in the European Union, Switzerland and Turkey. Since receipt of the CE Mark, we have signed agreements with new distributors in the United Kingdom, Italy, Spain, Portugal, Switzerland, the Middle East, South Africa and Brunei.

In February 2026, we entered into an Acquisition Purchase Agreement with SEG Jets LLC ("SEG Jets"), whereby we agreed to acquire 19.98% of the issued and outstanding shares of common stock of Fly Flyte, Inc. ("FLYTE") held by SEG Jets in exchange for 5,250 shares of our newly designated Series D Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, for an aggregate stated value of $5.3 million, subject to customary closing conditions and stockholder approval. In March 2026, we entered into a Securities Purchase Agreement with Creatd, Inc. ("Creatd"), whereby we acquired 80.02% of the remaining issued and outstanding shares of common stock of FLYTE and 100% of the membership interests of Ponderosa Air, LLC ("Ponderosa"), subject to closing conditions. As consideration for the acquired equity interests in FLYTE and Ponderosa, we agreed to pay $11.6 million as follows: (A) cash consideration $0.8 million due at closing, (B) $5.0 million in principal amount of a promissory note, and (C) 5,778 shares of Series D Convertible Preferred Stock for an aggregate stated value of $5.8 million. As a result of these transactions, we now own 100% of the issued and outstanding common stock of FLYTE common stock and 100% of the membership interests of Ponderosa.

With respect to our historical business, our strategy is to become a leading medical device company in the field of cardiac electrophysiology developing and selling electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias and reduce cost per procedure. We aim to establish VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias by reducing procedure time and patient complications and increasing procedural success.

Following the March 2026 acquisition of FLYTE, we now operate in two reporting segments: (i) cardiac electrophysiology and (ii) private aviation charter services.

Our business strategy is to become a leading medical device company in the field of cardiac electrophysiology, and we are dedicated to developing and delivering electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias. We aim to establish VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias by reducing procedure time, patient complications and increasing procedural success.

However, in order to attract capital to fund our operating losses while we pursue this strategy, we have also adopted a holding company structure within which we house and operate our FLYTE private aviation charter business which has the potential to quickly grow into a profitable subsidiary. FLYTE is a technology-enabled regional air mobility company operating a growing fleet of Cirrus Vision Jets. Focused on high frequency, short haul markets, FLYTE is providing a faster, safer, and more efficient alternative to commercial and existing private charter air travel. Flight operations are conducted through FLYTE's wholly owned subsidiary, Ponderosa Air, LLC, an FAA certified Part 135 air carrier. With certified aircraft, active revenue generating operations and scalable fleet expansion underway, FLYTE is seeking to build a disciplined, asset backed aviation infrastructure designed to serve underserved regional markets.

Recent Developments

On December 26, 2025, we issued an unsecured convertible notes payable with a principal amount of $102 thousand and a discount of $2 thousand to Boot Capital LLC for cash proceeds of $100 thousand. We further issued an unsecured convertible note payable with a principal amount of $204 thousand and a discount of $4 thousand to Vanquish Funding Group Inc. for cash proceeds of $200 thousand. The convertible notes payable have a maturity date of September 30, 2026 and stated interest rate of 10% per annum, which shall be payable when the principal amount is due. Any principal amount or interest that is not paid when due shall bear the default interest of 22% per annum.

In accordance with the fair value option, the convertible notes payable were recorded at fair value in the accompanying condensed consolidated balance sheets included elsewhere in this Quarterly Report. Changes in fair value of convertible notes payable along with interest expense are recorded under change in fair value of convertible notes payable in the accompanying condensed consolidated statements of operations included elsewhere in this Quarterly Report.

See Note 8, Notes Payable in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Modification of Related Party Notes

On December 31, 2025, we entered into the second amendment of the Related Party Notes, which extended the maturity date of the notes payable to the Jenkins Family Charitable Institute to January 31, 2028, and the notes payable to FatBoy Capital, L.P. ("FatBoy") and Mr. Jenkins to January 31, 2029. As part of the second amendment, we issued 170,000 Series M Warrants to FatBoy and Mr. Jenkins, respectively, and transferred the Perikard membership interests to Mr. Jenkins for de minimis proceeds. All other terms and conditions remained unchanged.

The second amendment was accounted for as a debt extinguishment since the amended terms and conditions were substantially different from prior terms and conditions. We derecognized the net carrying amount of the original Related Party Notes and recorded the amended Related Party Notes at fair value. Since the fair value of the amended Related Party Notes of $1.7 million was greater than the principal balance of $1.5 million, we recognized a premium of $0.2 million as of December 31, 2025. The difference between the reacquisition price, which is the sum of the fair values of the amended Related Party Notes, Perikard membership interests, and Series M Warrants, and the net carrying amount of the original Related Party Notes of $0.6 million was recorded as loss on debt extinguishment consolidated statements of operations for the year ended December 31, 2025.

See Note 8, Notes Payable in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Each Series M Warrant is exercisable for shares of the Company's common stock at an exercise price of $1.56 per share. The Series M Warrants are not exercisable until Stockholder Approval is obtained, and expire 5.5 years thereafter. Each Series M Warrant is exercisable into one share of the Company's common stock and may be exercised on a cashless basis under certain circumstances. The exercise price of the Series M Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company's common stock. The Series M Warrants are callable by the Company for $0.01 per share if the volume-weighted average price of the Company's common stock for 20 consecutive trading days exceeds $1.50 per share and the Series M Warrants have not been exercised. Stockholder approval has not been obtained.

The Company assessed the Series M Warrants and determined that they do not require liability classification pursuant to ASC Topic 480. Furthermore, the Series M Warrants do not have any net cash settlement provisions that would preclude equity classification under ASC Topic 815-40.

See Note 12, Equity Offerings in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the provisions for the Series M Warrants.

Royalty Payable Exchange

On December 31, 2025, we entered into the Series J Exchange Agreement ("Royalty Right Exchange") with Mr. Jenkins and FatBoy to exchange future and accrued royalty rights of $2.7 million for an aggregate of 9,490 shares of the Company's newly designated Series J Convertible Preferred Stock, par value $0.0001 per share and stated value of $1,000 per share. We derecognized $2.7 million of royalties payable due to related parties and recognized the fair value of the Series J Convertible Preferred Stock of $5.3 million in additional paid-in capital for the year ended December 31, 2025. The difference between the fair value of the Series J Convertible Preferred Stock and the fair value of the royalties payable due to related parties of $2.6 million was recorded as loss on debt extinguishment in the consolidated statement of operations for the year ended December 31, 2025.

See Note 13, Preferred Stock, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series J Convertible Preferred Stock issued in connection with the Royalty Right Exchange.

One of the third-party Noteholders remained a party to the royalty agreement and associated payable as of March 31, 2026.

February 2026 Private Placement

On February 6, 2026, we entered into a Securities Purchase Agreement with certain accredited investors for a private placement financing and issued an aggregate of (i) 392,608 shares of our common stock, par value $0.0001 per share, at a per share purchase price of $1.43 and (ii) 1,617 shares of newly designated Series C-1 Convertible Preferred Stock par value $0.0001 per share, with a stated value of $1,000 per share for gross proceeds of $2.2 million. The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock, par value $0.0001 per share, with stated values of $1,000 per share, under additional closings for aggregate gross proceeds of $1.6 million per closing. The additional closings are subject to certain closing conditions, including stockholder approval to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and to effect a reverse stock split ("Stockholder Approval") and, solely with respect to the closing of the Series C-3 Convertible Preferred Stock, declaration of the effectiveness of the Registration Statement filed for the resale of the common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock. The investors also have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock, par value $0.0001 per share, with stated value of $1,000 per share in one or more closings.

February 2026 Warrant Exercise and Series B Convertible Preferred Stock Conversion Inducement

In February 2026, the Company agreed to lower the exercise price of existing warrants and the conversion price of the Series B Convertible Preferred Stock to $1.78 per share for certain holders as consideration for exercising the existing warrants and converting the Series B Convertible Preferred Stock, resulting in aggregate proceeds of $0.4 million.

March 2026 Private Placement

On March 9, 2026, we entered into an additional Securities Purchase Agreement with certain accredited investors for a private placement financing pursuant to which the investors agreed to purchase 1,853 shares of Series C-1 Convertible Preferred Stock, par value of $0.0001 per share and stated value of $1,000 per share, for aggregate gross proceeds of $1.9 million. The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock, par value $0.0001 per share, with stated values of $1,000 per share, under additional closings for aggregate gross proceeds of $1.9 million per closing. The additional closings are subject to closing conditions, including approval from our stockholders to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and, solely with respect to the closing for the Series C-3 Convertible Preferred Stock, effectiveness of the Registration Statement filed to register the resale of common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock. The investors also have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock, par value $0.0001 per share, with stated value of $1,000 per share in one or more closings.

FLYTE Acquisition

In February 6, 2026, we entered into an Acquisition Purchase Agreement with SEG Jets LLC ("SEG Jets"), whereby we agreed to acquire 19.98% of the issued and outstanding shares of common stock of Fly Flyte, Inc. ("FLYTE") held by SEG Jets in exchange for 5,250 shares of our newly designated Series D Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, for an aggregate stated value of $5.2 million, subject to customary closing conditions and stockholder approval. In March 9, 2026, we entered into a Securities Purchase Agreement with Creatd, whereby we acquired 80.02% of the remaining issued and outstanding shares of common stock of FLYTE and 100% of the membership interests of Ponderosa Air, LLC ("Ponderosa"), subject to closing conditions. As consideration for the acquired equity interests in FLYTE and Ponderosa, we agreed to pay $11.6 million as follows: (A) cash consideration $0.8 million due at closing, (B) $5.0 million in principal amount of a promissory note, and (C) 5,778 shares of Series D Convertible Preferred Stock for an aggregate stated value of $5.8 million. As a result of these transactions, we owned 100% of the issued and outstanding common stock of FLYTE common stock and 100% of the membership interests of Ponderosa as of March 9, 2026.

Additional information regarding the FLYTE acquisition is set forth in our Current Report on Form 8-K filed with the SEC on February 6, 2026 and March 9, 2026 and in Note 3 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

FLYTE is a technology-powered, private air transportation company. Founded in August 2018, FLYTE's mission is to make private air travel a passenger-first, more inclusive and accessible mode of transportation, made possible through properly applied technology, use of more conveniently located existing infrastructure and operational efficiencies. FLYTE provides two distinct air travel services: Flyte Hops operates short-haul charter routes using its own fleet of leased Cirrus Vision jets flown by pilots that are full-time employees of Flyte. Flyte manages marketing, customer booking, flight scheduling, pricing, collects payment, purchases jet fuel, files the flight plan, uses its own aircraft flown by its own pilots to fly the customers, maintains all necessary FAA certifications. Flyte Luxe matches passengers seeking airplanes larger than the Cirrus Vision or with longer range with appropriate 3rd party aircraft and crews, providing private aviation coordination and bespoke travel experiences. We believe FLYTE is positioned to compete with operators focused on the emerging urban air mobility ("UAM"), regional air mobility ("RAM") and advanced air mobility ("AAM") markets, each of which is likely to consist primarily of short-range electric-powered aircraft using short take-off and vertical take-off and landing technology.

The financial results of FLYTE are included in our unaudited condensed consolidated financial statements from March 10, 2026 through March 31, 2026. As a result, the consolidated results of operations for the three months ended March 31, 2026 reflect approximately twenty-two days of contribution from FLYTE, and the comparative results for the three months ended March 31, 2025 do not include any results of FLYTE. Investors are cautioned that period-over-period comparisons of our consolidated results of operations are not directly comparable as a result of the Acquisition.

Issuance of Series D Convertible Preferred Stock

Components of our Results of Operations for the Three Months Ended March 31, 2026 and 2025

Revenues

Our current activities primarily relate to the design, manufacture and sale of new and innovative medical technologies in the field of cardiac electrophysiology and private aviation charter services. Our two primary products under the cardiac electrophysiology segment are (i) the VIVO System and (ii) the LockeT device.

The VIVO System provides 3D cardiac mapping to aid with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to electrophysiology studies. Customers also have the option to purchase software upgrades in advance at contract inception. We invoice the customer for VIVO System and related software upgrade services after physical possession and control of VIVO System has been transferred. Subsequent renewals for software upgrade services are invoiced at inception of the renewed term. The timing of payment for the corresponding invoices depends on the credit terms identified in each contract. We recognize revenues for VIVO System at the point in time that the product is delivered to the customer. We recognize revenues for software upgrade services evenly over time over the term of the contract. We did not recognize any revenues for software upgrade services for the three months ended March 31, 2026 and 2025.

LockeT is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure. We recognize sales of LockeT at the point in time that the product is delivered to the customer.

We generate service revenue through two primary private aviation charter services, (i) Hops and (ii) Luxe.

Hops refers to short-haul private flights operated directly by us under its Part 135 certificate. These flights are conducted on aircraft managed by us and typically service high-demand regional routes throughout the New York Metro Area, Long Island, New England and the Eastern seaboard, to any destination within 400 nautical miles of the Company's base in Farmingdale, New York. For Hops arrangements, we act as the principal because we control the specified flight service before it is transferred to the customer, are primarily responsible for operating and fulfilling the flight, and have discretion in establishing pricing. Accordingly, Hops revenue is presented on a gross basis. We recognize revenue upon completion of each flight and includes base charter rates, repositioning fees, and ancillary charges. Customer payments received in advance are recorded as deferred revenue until the related flight is completed.

Luxe is the operated under our brokerage division, offering clients access to on-demand charters through a vetted network of third-party operators. We recognize revenue when control of the promised service is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We utilized registered independent third-party aircraft operators in the performance of all of our flights in 2025. We evaluate whether there is a promise to transfer services to the customer, as the principal, or to arrange for services to be provided by another party, as the agent, using a control model. Based on this evaluation, it was determined that we act as the agent within Luxe revenue arrangements, because the third-party aircraft operator is primarily responsible for operating and fulfilling the flight, and we do not control the underlying flight service before it is provided to the customer. Accordingly, Luxe revenue is presented on a net basis, representing the net amount retained by us after amounts payable to the third-party aircraft operator. The nature of the flight services we provide to customers is similar regardless of which third-party aircraft operators is involved. We direct third-party aircraft operators to provide an aircraft to a customer. Based on evaluation of the control model, it was determined that we act as the principal rather than the agent within all revenue arrangements, as we have the authority to direct the key components of the service on behalf of the customer regardless of which third-party is used.

Service revenue is earned and recognized as revenue at the point in time in which the service is provided. We generally does not issue refunds for flights unless there is a failure to meet its service obligations. For roundtrip flights, revenue is recognized upon arrival at the destination for each flight.

We are a business that has operations within and outside of the United States. During the three months ended March 31, 2026 and 2025, approximately 62% and 6% of our product sales were derived from customers outside of the United States, respectively. During the three months ended March 31, 2026, 100% of our service revenue was derived from customers inside of the United States.

Cost of revenues

Cost of product revenues consists primarily of component costs, labor costs, and manufacturing overhead incurred to produce our products and support production. Cost of service revenues consists of primarily labor costs, fuel costs and landing fees related to our Hops aviation charter services.

Selling, general and administrative expenses

Selling, general and administrative ("SG&A") expenses consist of employee-related costs, including salaries, benefits and stock-based compensation expenses. Other SG&A expenses include amortization of intangible assets, depreciation of fixed assets, professional services fees, including legal, audit and tax fees, insurance fees, general corporate expenses and facility-related expenses.

Research and development expenses

Research and development ("R&D") expenses are expensed as incurred and include research grants paid to other parties, product development, costs of clinical studies to support new products and product enhancements, including expanded indications, supplies used for internal R&D and clinical activities, and costs for outside consultants who assist with technology development and clinical affairs.

Acquired in-process research and development expenses

Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as IPR&D. Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

The following table sets forth the results of the Company's operations for the periods presented (in thousands):

(1) Constitutes the operating activities within other income (expense), net in the condensed consolidated statements of operations, except for the change in fair value of royalties payable due to related parties that is presented separately in the table above.

Revenues

The increase in product revenue of approximately $105 thousand for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was due to an increase of $46 thousand and $59 in LockeT and VIVO System sales, respectively. The increase in LockeT sales is primarily the result of our sales team's efforts to effectively prove the procedural efficiency, cost-effectiveness and improved patient experience resulting from the use of LockeT compared with incumbent or competing closure devices to prospective new hospital customers. Accordingly, we have entered into long-term contracts with a number of those hospitals, which has resulted in receiving initial and repeat orders as the LockeT devices are used and consumed in clinical procedures. The increase in VIVO System sales was primarily due to growth in international patch sales resulting from expanded European sales efforts

The increase in service revenue of approximately $184 thousand for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was due to the acquisition of FLYTE during the period, which contributed to additional revenue stream from the private aviation charter services.

Cost of revenues

The increase in cost of revenues of approximately $31 thousand for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was primarily due to an increase in LockeT and VIVO System sales, which resulted in higher related cost of revenues of approximately $20 thousand and cost of revenues associated with the increase in private charter aviation services revenue of $11 thousand.

Selling, general and administrative expenses

The decrease in selling, general and administrative expenses of approximately $0.9 million for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was due to a decrease in salaries and benefits of $0.5 million, a decrease in investor relations and SEC fees of $0.2 million as well as a decrease in depreciation and amortization of $0.1 million, respectively. The decrease in salaries and benefits was primarily due to a reduction in overall headcount and a restructuring of sales compensation. The decrease in investor relations and SEC fees was driven by non-recurring expenses from the prior year period related to a shareholder meeting, consulting and advisory services, and stock-based compensation. Finally, the decrease in professional fees was primarily attributable to lower legal expenses following a transition to new corporate counsel in the fall of 2025.

Research and development expenses

The increase in research and development expenses of approximately $0.1 thousand for the three months ended March 31, 2026, as compared to the corresponding period in the prior year, was primarily due to an increase in professional fees of $0.1 million that relates to third-party consulting for VIVO software upgrades and the development of a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue.

Acquired in-process research and development expenses

We did not incur any acquired in-process research and development expenses during the three months ended March 31, 2026. The decrease in acquired in-process research and development expenses of approximately $0.1 million for the three months ended March 31, 2026 as compared the corresponding period in the prior year primarily relates the asset acquisitions completed in on January 24, 2025. We acquired 100% of the membership interests of Perikard, LLC for $119 thousand, which was accounted for as an asset acquisition consisting primarily of a single patent for pericardial access technology. The patent was determined to be IPR&D with no alternative future use, and accordingly, we recognized $119 thousand, consisting of $113 thousand of stock consideration and $6 thousand of direct transaction costs, as acquired in-process research and development in the condensed consolidated statements of operations for the three months ended March 31, 2025.

Change in fair value of equity investment

This represents the change in fair value of our initial minority equity interest of 19.98% in FLYTE from $5.2 million as of February 6, 2026 to $2.9 million as of March 9, 2026, the date we acquired a controlling equity interest in FLYTE. The fair value of the investment was determined based on the implied transaction value of FLYTE, which was derived from the purchase price paid to acquire the remaining 80.02% interest in FLYTE.

Change in fair value of deferred consideration

We remeasured the deferred consideration payable incurred for our controlling equity interest in FLYTE as of March 31, 2026, and recorded a gain of $2.9 million for the change in fair value of deferred consideration.

Change in fair value of royalties payable due to related parties

At each reporting period, the fair value of the royalties payable due to related parties is calculated using the discounted cash flow method. During the three months ended March 31, 2026, we did not record a change in fair value of royalties payable due to related parties as there is no there was no triggering event. As a result, the change in fair value of royalties payable due to related parties decreased approximately by $1.2 million for the three months ended March 31, 2026 as compared to the corresponding period in the prior year.

Other income (expense), net

The increase in other income (expense), net of $0.1 million for the three months ended March 31, 2026 as compared to the corresponding periods in the prior year, primarily relates to an increase in interest expense incurred in connection with the note payable issued by Cardionomix on May 5, 2025, the short-term note payables issued by KardioNav on July 11, 2025, and the assumed notes in relation to the FLYTE Acquisition. We did not incur interest expense on these related party notes or the assumed notes for the three months ended March 31, 2025.

Income tax benefit

The decrease in income tax benefit of approximately $0.5 thousand for the three months ended March 31, 2026, as compared to the corresponding periods in the prior year primarily relates to changes in the estimated amount of net operating losses that are not subject to limitations under Section 382 of the Internal Revenue Code.

Liquidity and capital resources

As of March 31, 2026, we had cash and cash equivalents of $0.4 million and an accumulated deficit of $311.2 million. For the three months ended March 31, 2026, net cash used in operating activities was $2.8 million. We have incurred recurring net losses from operations and negative cash flows from operating activities since inception.

In February and March 2026, we raised gross proceeds of $3.5 in connection with the February 2026 and March 2026 Private Placements, respectively. We also raised gross proceeds of $0.4 million through the induced exercise of certain existing warrants and conversion of the Series B Convertible Preferred Stock. In addition, as a result of the FLYTE Acquisition, we paid $0.8 million in cash at closing to Creatd and issued a promissory note with a principal amount of $5.0 million and an interest rate of 0% per annum to Creatd.

In April 2026, we raised gross proceeds of $3.5 million in connection with the February 2026 and March 2026 under the Second Tranche.

We expect operating losses and negative cash flows to continue for the foreseeable future unless our sales and gross profit increase sufficiently to cover our operating expenses. We expect our current operating expenses to remain relatively fixed for the near term, absent entering into a transformative strategic transaction. We believe that our current cash on hand of $1.1 million as of May 8, 2026 will not be sufficient to fund our current operations. Further, we have outstanding short-term notes that will become due and payable within the next twelve months, including the March Bridge Note which come due in May 2026, the notes payable of variable interest entities due to related parties that will be due in July 2026, and Assumed Notes acquired in the Flyte Acquisition that are past due.

We estimate that we will require additional capital over the next twelve months to:

As of March 31, 2026, we have debt obligations due within the next twelve months. If we are unable to refinance or extend these obligations prior to maturity, we will be required to repay them from cash on hand or from proceeds of additional financing, which may not be available on acceptable terms or at all.

Because expected revenues are not adequate to fund our planned expenditures and anticipated operating costs and liabilities beyond such point, we are currently evaluating potential means of raising cash, as described below, to fund our operations and to pay our debts as they come due. If we are unable to do so, we will be required to reduce our spending to align with expected revenue levels and cash reserves, although there can be no guarantee that we will be successful in doing so. If we are unable to do so, we will be required to suspend a portion or all of our operations and/or potentially seek relief from our creditors. We may not be able to secure financing in a timely manner or on favorable terms, if at all. Due to the challenging economic environment, we have explored and continue to explore a wide variety of possible capital-raising and strategic transactions, including but not limited to private equity offerings, registered issuances, credit facilities, and convertible debt, as well as other innovative and specialty finance strategies or business combination. There is no guarantee that we will succeed in securing the financing or other strategic transaction needed to sustain our company or that any such transaction will be on our preferred terms.

Management plans to address our liquidity needs include actively pursuing multiple strategies to obtain the capital necessary to continue operations, including equity financing, debt financing, and strategic transactions. We have engaged a financial advisor to assist in evaluating these alternatives. However, there can be no assurance that any strategic transaction will be successfully completed, and any such transaction may not occur on terms favorable to us or our stockholders.

As a result of these factors, we have concluded that there is substantial doubt about the Company's ability to continue as a going concern for a period of one year after the date the condensed consolidated financial statements for the quarter ended March 31, 2026 are issued. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result should we be unable to continue as a going concern and the outcome of this uncertainty.

Cash Flows for the Three Months Ended March 31, 2026 and 2025 (in thousands)

Net cash used in operating activities

During the three months ended March 31, 2026, net cash used in operating activities of $2.8 million primarily related to the net loss of $1.7 million and a decrease in operating assets and liabilities of $1.0 million. This was partially offset by non-cash adjustments related to depreciation and amortization of $0.4 million.

During the three months ended March 31, 2025, net cash used in operating activities of $2.3 million primarily related to the net loss of $4.0 million and non-cash adjustments related to deferred income tax benefits of $0.7 million. This was partially offset by an increase in operating assets and liabilities of $0.5 million and non-cash adjustments related to depreciation and amortization of $0.5 million and change in fair value of royalties payable due to related parties of $1.2 million.

Net cash used in investing activities

During the three months ended March 31, 2026, net cash used in investing activities of $1.3 million primarily related to the FLYTE Acquisition of $1.2 million.

During the three months ended March 31, 2025, net cash used in investing activities of $10 thousand consisted of purchases of property and equipment.

Net cash provided by financing activities

During the three months ended March 31, 2026, net cash provided by financing activities of $4.5 million consisted of net proceeds from issuance of common stock and other equity-classified contracts of $3.7 million, proceeds from the exercise of warrants issuance of $0.4 million, and proceeds from notes payable of $0.8 million, partially offset by $0.5 million in payments on notes payable.

During the three months ended March 31, 2025, net cash provided by financing activities of $0.1 million primarily consisted of payments on notes payable.

Off-balance sheet arrangements

We have not engaged in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, as a part of our ongoing business. Accordingly, we did not have any off-balance sheet arrangements during any of the periods presented.

The Company's Critical Accounting Estimates

The information set forth below relates to our critical accounting policies and estimates. Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Our estimates are based on current facts, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Accordingly, a different financial presentation could result depending on the judgments, estimates or assumptions that are used. However, we do not believe that actual results will deviate materially from our estimates related to our accounting policies described below but because application of these accounting policies involves the exercise of judgment and the use of assumptions as to future uncertainties, actual results could differ materially from these estimates. Therefore, we consider an understanding of the variability and judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial results.

The discussion and analysis of our financial position and results of operations is based on our condensed consolidated financial statements included elsewhere in this Quarterly Report, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We regularly evaluate estimates and assumptions related to asset acquisitions, including the provisions for legal contingencies, income taxes, deferred income tax asset valuation allowances, royalties payable due to related parties, share based compensation, evaluation of impairment of long-lived assets, valuation of long-lived assets and their associated estimated useful lives, and revenues.

We believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.

Accounting for long-lived assets - estimated useful lives

Intangible assets acquired from business combinations are initially measured at their estimated fair values and are then amortized on a straight-line basis over their estimated useful lives. Management evaluates whether events or circumstances have occurred that indicate the remaining useful life or carrying value of the amortizing intangible assets should be revised and adjusted, if necessary.

Accounting for impairment of long-lived assets

We periodically review our long-lived assets for impairment whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value of the long-lived assets may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss equal to the excess of the assets carrying value over its fair value is recorded in our condensed consolidated statements of operations at that date.

Royalties payable

We are obligated to pay royalties related to the sales of LockeT and AMIGO System under various royalty agreements executed by Old Catheter. We recognize a liability for royalty fees incurred and payable based on actual sales of products under current portion of royalties payable due to related parties in the condensed consolidated balance sheets. We recognize a liability for future, estimated royalty payments at fair value under current portion of royalties payable due to related parties and royalties payable due to related parties in the condensed consolidated balance sheets if it is payable within the next 12 months and under royalties payable due to related parties in the condensed consolidated balance sheets if it is payable 12 months after the balance sheet date. The royalties payable due to related parties are remeasured at each reporting period. Changes in fair value of royalties payable due to related parties are recorded on the condensed consolidated statements of operations in the period in which they occur.

The fair value measurement of royalties payable due to related parties includes significant unobservable inputs that are not supported by any market data. Royalties payable due to related parties equal the present value of estimated future royalty payments. We apply an internally developed, revenue adjusted discount rate ("RADR") to discount back the forecasted royalty payments. The RADR is based on the Company's weighted average cost of capital ("WACC") adjusted for the product revenue's risk profile. The risk-free rate used to determine the cost of equity for the RADR is adjusted to be commensurate with the term of the royalty agreements. Furthermore, the Beta and Risk Premium used to determine the cost of equity are also adjusted to reflect the product revenue's volatility. All other inputs for the RADR and our WACC are the same. The RADR was 19.5% as of March 31, 2026 and December 31, 2025.

Convertible notes payable

We elected to measure the Convertible Notes Payable using the fair value option under ASC Topic 825. The fair value of the Convertible Notes Payable is remeasured at each reporting date using a probability weighted expected return model ("PWER model"). The PWER model values the convertible notes payable based on the discounted cash flows of three potential settlement outcomes: (i) the convertible notes payable will be converted into and settled in shares of common stock, (ii) the convertible notes payable's principal and accrued interest will be paid in cash, and (iii) a dissolution scenario wherein the investor receives a partial payment based on a recovery rate. The conversion outcome incorporates a Monte Carlo simulation to estimate our common stock price at the expected conversion date and the number of shares issuable based on the variable conversion price. Aside from the probability of the three potential settlement outcomes, the fair value measurement incorporates several significant unobservable inputs, including the recovery rate, implied equity volatility, expected term assumptions, simulated conversion price, and credit-risk adjusted discount rate.

Goodwill and Other Intangible Assets

We use the acquisition method of accounting, in accordance with ASC Topic 805, "Business Combinations" ("ASC Topic 805") to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed are recognized as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results. Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, revenue growth rates and earnings before interest, taxes, depreciation and amortization, margins, discount rates, customer attrition rates, royalty rates, asset lives and market multiples, among other items. We determine the fair values of intangible assets acquired generally in consultation with third-party valuation advisors. Any fair value adjustments to the assets and liabilities are recognized and the results of operations of the acquired business are included in our condensed consolidated financial statements from the effective date of the acquisition.

New Accounting Pronouncements