Catheter Precision, Inc. current report, 09 January 2023

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Business Context and Reporting Period

Company: Ra Medical Systems, Inc. (RMED)
Reporting Date: January 9, 2023
Event: Completion of acquisition of Catheter Precision, Inc. (Catheter) and concurrent capital raising activities.
Strategic Shift: The Post-Merger Combined Company will cease Ra Medical's legacy operations and shift focus entirely to Catheter's electrophysiology product lines. Headquarters will relocate from California.

Key Financial Metrics and Transaction Terms

Acquisition Consideration:

  • Equity Conversion: Catheter common stock converted to Series X Convertible Preferred Stock at an exchange ratio of approximately 0.6705 per 1,000 shares.
  • Debt Conversion: $25,215,000 of Catheter convertible notes converted to Series X Preferred Stock at $3.20 per 1/1,000th share.
  • Debt Settlement: Note holders received royalty rights equal to 11.82% of Net Sales on Catheter's vessel closure device in exchange for forgiven interest.
  • Remaining Debt: $250,000 of Catheter notes remain outstanding.
  • Options: Approximately 753,694 new Ra Medical options assumed for former Catheter option holders.

Capital Raising (Private Placement & Warrants):

  • PIPE Investment: Armistice Master Fund Ltd. agreed to purchase Class A and Class B Units for an aggregate price of approximately $8.0 million.
  • Warrant Repricing: Existing warrants (331,608 shares) repriced from $14.00–$526.50 to $4.00. Expected gross proceeds from exercise: ~$1.3 million.
  • Inducement Warrants: New Series E Warrants issued to Armistice for 100% of shares issued upon exercise of repriced warrants.

Liquidity and Cash Flow:

  • Net proceeds from the Private Placement and warrant exercises will fund product development and general corporate purposes.
  • Company repaid ~$1.075 million in personal, interest-free loans to David Jenkins at closing.

Material Changes Versus Prior Period

Corporate Structure:

  • Board Changes: Richard Mejia, Jr. and Joan Stafslien resigned. David Jenkins (Catheter CEO) appointed Executive Chairman; James Caruso appointed Director.
  • Management: Will McGuire (CEO) and Brian Conn (Interim CFO) to remain temporarily until successors are appointed.
  • Ownership: Significant dilution expected upon conversion of Series X Preferred Stock and PIPE securities, subject to ownership blockers (40% aggregate limit).

Operations:

  • Discontinuation of Ra Medical's legacy assets and business lines.
  • Adoption of Catheter's three product areas: VIVO (ventricular arrhythmia mapping), Amigo (robotic catheter control), and a vessel closure device (in development).

Guidance, Outlook, Risks, and Contingencies

Outlook and Product Pipeline:

  • VIVO: FDA-cleared and CE Marked; targets ventricular arrhythmias.
  • Amigo: Second-generation robotic arm in development.
  • Vessel Closure Device: Targeted for release in H1 2023; estimated global market >1 million procedures/year.

Contingencies and Risks:

  • Stockholder Approval: Conversion of Series X Preferred Stock, PIPE Preferred Stock, and PIPE Warrants requires Ra Medical stockholder approval.
  • Ownership Blockers: Series X Preferred Stock conversion is capped at 40% of outstanding common stock (Aggregate Ownership Blocker) and subject to individual beneficial ownership limits (Beneficial Ownership Blocker).
  • Dividend Accrual: If stockholder approval for conversion is not obtained within six months, Series X Preferred Stock will accrue dividends at $15 per share per annum.
  • Listing Status: Subsequent conversion of blocked shares requires the company to be listed on a national exchange (or delisted) and 18 months to pass since closing.
  • Forward-Looking Risks: Uncertainty regarding capital market access, product commercialization timelines, and potential "shell company" rule applications.

Investor Verification Checklist

  • Proxy Statement: Verify the upcoming Proxy Statement for details on the Parent Stockholder Matters and voting requirements.
  • Financial Statements: Review Catheter's unaudited financial statements (Sept 30, 2022) and pro forma information filed as Exhibits 99.4, 99.5, and 99.6.
  • Conversion Mechanics: Confirm the specific terms of the "Aggregate Ownership Blocker" and "Beneficial Ownership Blocker" in the Certificate of Designation (Exhibit 3.1).
  • Related Party Transactions: Note the repayment of $1.075M to David Jenkins and the issuance of significant equity to Jenkins and his family members.
  • Regulatory Status: Monitor the status of the vessel closure device FDA clearance and the company's listing status on NYSE American.