The unaudited condensed consolidated financial statements of the Company include the accounts of the Company, Old Catheter, Cardionomix, KardioNav, FLYTE, and Ponderosa. All intercompany transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP") applicable to interim financial statements. The Financial Accounting Standards Board (“FASB”) establishes these principles to ensure financial condition, results of operations, and cash flows are consistently reported. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative nongovernmental GAAP as found in the FASB Accounting Standards Codification ("ASC"). Certain footnotes and other financial information normally required by U.S. GAAP have been condensed or omitted in accordance with instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, such statements include all adjustments which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company. The operating results presented herein are not necessarily an indication of the results that may be expected for the year. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on March 31, 2026.

Certain prior period financial statement amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit. In the current period, the Company separately discloses amortization of operating right-of-use assets in the condensed consolidated statements of cash flows. For comparative purposes, amounts in the prior periods have been reclassified to conform to current period presentations.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The Company’s unaudited condensed consolidated financial statements are based upon a number of estimates including, but not limited to, the allowance for credit losses, evaluation of impairment of long-lived assets, valuation of long-lived assets and their associated estimated useful lives, reserves for warranty costs, evaluation of probable loss contingencies, fair value of royalties payable due to related parties, fair value of contingent consideration recorded in connection with an asset acquisition, fair value of assumed liabilities, acquired assets, and consideration transferred in connection with a business combination, fair value of preferred stock issued, including valuation of the deemed dividend, fair value of warrants issued, and fair value of equity awards granted.

The Company's financial instruments held during the three months ended March 31, 2026 and 2025 that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company generally maintains cash and cash equivalent balances in various operating accounts at financial institutions with high quality credit ratings in amounts in excess of federally insured limits of $250,000. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to significant or unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other hedging arrangements.

The Company extends credit to customers in the normal course of business. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the condensed consolidated balance sheets. The Company does not require collateral from its customers to secure accounts receivable.

The Company had four customers that individually accounted for 10% or more of total revenues included in the condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025, respectively. Four customers represented 12%, 10%, 10%, and 10% of total revenues for the three months ended March 31, 2026 and three customers represented 42%, 18%, and 10% of total revenues for the three months ended March 31, 2025

The Company had three and five customers that individually accounted for more than 10% of total accounts receivable included in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively. Three customers represented 17%, 15% and 12% of accounts receivable as of March 31, 2026. Two customers represented 27% and 15%, and three customers each represented 10% of accounts receivable as of December 31, 2025.

Certain prior period financial statement amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the Company's previously reported results of operations or accumulated deficit. In the current period, the Company (i) separately discloses interest expense due to related parties in the condensed consolidated statements of operations. For comparative purposes, amounts in the prior periods have been reclassified to conform to current period presentations.

Following the acquisition of FLYTE, the Company determined that it operates in two reportable segments: (i) cardiac electrophysiology and (ii) private aviation. The Company’s cardiac electrophysiology segment includes all activities related to the marketing, sales, and development of medical technologies in the cardiac electrophysiology field. While the commercial efforts that coordinate the marketing, sales, and distribution of the cardiac electrophysiology products are organized by geographic region and product, all of these activities are supported by a single corporate team and distribution channel. The Company’s private aviation segment includes all activities related to the marketing, sales, and delivery of private aviation services to customers through FLYTE. All of its operations are centrally managed within the United States by a single corporate team. The determination of two reportable segments is consistent with the condensed consolidated financial information available and regularly reviewed by the Company’s chief operating decision maker (“CODM”).

The CODM is the Company’s Chief Executive Officer, who reviews and evaluates net loss for each reportable segment, for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. Segment asset measures are not used as a basis for the CODM to evaluate the performance of or to allocate resources to the segments.

The following table summarizes the segment revenues and significant segment expenses included in the measure of segment profit or loss (segment net loss) reviewed by the CODM (in thousands):

(1) Other segment items include other income (expense), net, consulting fees, investor relations and SEC fees, insurance fees, and other selling, general, and administrative expenses. Other selling, general, and administrative expenses primarily consist of travel expenses, computer and information technology expenses, and rent expenses.

In connection with the FLYTE acquisition, including the associated tax implications of the acquisition, the Company recognized $9.7 million in goodwill that is fully allocated to the private aviation segment.

The Company considers all highly liquid investments purchased with an original maturity date of ninety days or less at the date of purchase to be cash equivalents. Cash and cash equivalents primarily represent funds invested in readily available checking and money market accounts.

Fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to identify inputs used in measuring fair value as follows:

Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 - Inputs other than the quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

Level 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Cash equivalents, prepaid expenses, accounts receivable, accounts payable, accrued expenses, and short-term notes payable are reported on the condensed consolidated balance sheets at carrying value, which approximate fair value due to the short-term maturities of these instruments. Deferred consideration approximates fair value as it is reported at the amount of cash that would be paid if settlement occurred as of March 31, 2026. Similarly, the carrying value of the notes payable of variable interest entities, notes payable due to related parties, and notes payable approximate their fair value due to the associated effective interest rates of the debt instruments.

The following table details the fair value measurements within the fair value hierarchy of the Company’s financial instruments (in thousands):

The Company elected the fair value option to measure the convertible notes payable. The fair value of the convertible notes payable is determined using a probability weighted expected return model ("PWER model”) that 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 the Company’s 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.

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 reflect the present value of estimated future royalty payments. The Company applies 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 the Company’s WACC are the same. See Note 9, Royalties Payable, for additional information over royalties payable due to related parties.

The deferred consideration consists of two components. The first deferred consideration component arose from the Company's initial 19.98% minority equity interest in FLYTE on February 6, 2026, and the second component related to the subsequent acquisition of the remaining outstanding equity in FLYTE on March 9, 2026. See Note 3, Business Combinations, for additional information. The Company is obligated to issue to the sellers an aggregate of 11,028 shares of the Company’s Series D Convertible Preferred Stock. In accordance with ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), this obligation failed to meet the equity classification criteria in ASC Topic 815-40-25. Therefore, it does not qualify for the scope exception from derivative accounting. This obligation is classified as a liability on the condensed consolidated balance sheet and measured at fair value, with changes in fair value reflected in the condensed consolidated statements of operations at each reporting period end. Deferred consideration expected to be settled within twelve months or less is classified as a current liability on the condensed consolidated balance sheets.

The deferred consideration has been classified as a Level 3 recurring liability because the valuation utilizes certain unobservable inputs that are supported by little or no market data. The fair value of the Series D Convertible Preferred Stock is measured using the if converted method, which included contractual terms such as the number of units issued, the $1,000 issued stated value, and the contractual conversion price. The if converted method also utilizes observable inputs, such as the underlying common stock price on the acquisition date and the period end remeasurement date, and incorporated unobservable inputs related to a 20% discount for lack of marketability.

The fair value of the first component of deferred consideration initially recorded on February 6, 2026 was approximately $5.3 million. Upon obtaining control of FLYTE on March 9, 2026, the Company recorded the second component of the deferred consideration of approximately $5.8 million. The Company remeasured the total deferred consideration as of March 31, 2026, resulting in a decrease in fair value of approximately $2.9 million, which was recognized as a gain in the condensed consolidated statements of operations. As of March 31, 2026, the fair value of the total deferred consideration was approximately $8.2 million.

The following tables summarize the significant unobservable inputs used in Level 3 financial instruments as of March 31, 2026:

The significant unobservable inputs used for royalties payable due to related parties as of December 31, 2025 are the same as those displayed above for March 31, 2026. The deferred consideration did not exist as of December 31, 2025 and therefore no significant unobservable inputs are disclosed for deferred consideration as of December 31, 2025.

The table below summarizes the change in account balance for Level 3 financial instruments for the three months ended March 31, 2026 (in thousands):

The table below summarizes the change in account balance for Level 3 financial instruments for the three months ended March 31, 2025 (in thousands):

Increases or decreases in the fair value of royalties payable due to related parties, convertible notes payable, and deferred consideration can result from updates to assumptions. Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Changes or updates to assumptions could have a material impact on the reported fair value, the change in fair value, and the results of operations in any given period.

Accounts receivable consists of trade receivables recorded at invoiced amounts. Accounts receivable is presented net of any discounts and allowance for credit losses, is unsecured and does not bear interest. Accounts receivable is evaluated for collectability based on historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts, including the probability of future collection and estimated loss rates based on aging schedules.

Changes in the estimated collectability of accounts receivable are recorded in the condensed consolidated statements of operations in the period in which the estimate is revised. Accounts receivable are written off as uncollectible after all means of collection are exhausted. Any subsequent recoveries are credited to the allowance for credit losses. As of March 31, 2026 and December 31, 2025, the allowance for credit losses related to accounts receivable was immaterial.

Inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. The Company reduces the carrying value of inventories for those items that are potentially in excess, obsolete or slow-moving based on changes in customer demand, technological developments or other economic factors.

Property and equipment are recorded at cost, less accumulated depreciation. Property and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

The Company periodically reviews the residual values and estimated useful lives of each class of its property and equipment for ongoing reasonableness, considering the long-term views of their intended use and the level of planned improvements to maintain and enhance those assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective account balances, and any resulting gain or loss is recognized in the Company’s condensed consolidated statements of operations. The cost of repairs and maintenance is expensed as incurred, whereas significant renewals and betterments are capitalized.

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations ("ASC Topic 805"). The purchase price of an acquisition is allocated to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the identifiable net assets acquired is recorded as goodwill. Transaction costs related to business combinations, such as legal, accounting, valuation, and other professional or consulting fees, are expensed as incurred and included in selling, general and administrative expenses in the condensed consolidated statements of operations.

The Company may adjust the preliminary purchase price allocation, as necessary, for up to one year after the acquisition closing date (the “measurement period”) as it obtains more information regarding asset valuations and liabilities assumed that existed at the acquisition date. Measurement period adjustments are recorded in the period in which the adjustments are determined.

Deferred tax assets and liabilities are recognized for the tax effects of temporary differences between the tax bases and the recognized amounts of assets acquired and liabilities assumed in accordance with ASC Topic 740, Income Taxes ("ASC Topic 740").

Goodwill and indefinite-lived intangible assets are not amortized. Goodwill and indefinite-lived intangible assets are tested for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company has the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the Company elects to bypass the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative test is performed. An impairment charge for goodwill is recognized for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. An impairment charge for indefinite-lived intangible assets is recognized for the amount by which the carrying amount of the indefinite-lived intangible asset exceeds its fair value.

The Company completed a qualitative assessment and determined that there was no evidence of impairment to the balance of its goodwill and indefinite-lived intangible assets as of March 31, 2026 and December 31, 2025, respectively.

The Company periodically reviews its 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 the Company’s condensed consolidated statements of operations at that date.

There were no impairment charges recorded as of March 31, 2026 and March 31, 2025.

The Company is obligated to pay royalties related to the sales of LockeT and AMIGO System under various royalty agreements executed by Old Catheter. The Company recognizes 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. The Company recognizes a liability for future, estimated royalty payments at fair value under current portion of 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 is remeasured at each reporting period. Changes in fair value of royalties payable due to related parties are recorded in the condensed consolidated statements of operations in the period in which they occur. See Note 9, Royalties Payable for additional information.

The Company accounts for acquisitions of assets or a group of assets that do not meet the definition of a business as asset acquisitions based on the cost to acquire the asset or group of assets, which includes certain transaction costs. In an asset acquisition, the cost to acquire is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as of the acquisition date. No goodwill is recorded in an asset acquisition.

Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as in-process research and development (“IPR&D”) in the condensed consolidated balance sheets. Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as acquired-in-process research and development expense in the condensed consolidated statements of operations as of the acquisition date.

Contingent consideration in asset acquisitions that is not accounted for as a derivative is measured and recognized when payment becomes probable and reasonably estimable. Subsequent changes in the accrued amount of contingent consideration are measured and recognized at the end of each reporting period and upon settlement as an adjustment to the cost basis of the acquired asset or group of assets, or, if related to IPR&D with no alternative future use, recognized as expense. Contingent consideration that is in the form of a sales or usage-based royalty payment is recognized as an expense as incurred.

Convertible notes payable represent debt-host financial instruments whose embedded features must be assessed for bifurcation and separate accounting as derivative liabilities under ASC Topic 815, unless the fair value option is elected to measure certain financial assets and liabilities at fair value under ASC Topic 825, Financial Instruments ("ASC Topic 825”). The fair value option may be elected on a financial instrument-by- financial instrument basis and is irrevocable, unless a new election date occurs. The fair value option simplifies the accounting by requiring the entire financial instrument to be measured at fair value.

As permitted under ASC Topic 825, the Company elected the fair value option to account for the convertible notes payable issued on December 26, 2025 (see Note 8, Notes Payable). The Company records convertible notes payable at fair value with any changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations. The change in fair value of convertible notes payable includes interest expense accrued for the convertible notes payable. Any portion of the change in fair value that is attributed to a change in the convertible note payables’ credit risk is recognized as a component of other comprehensive income.

As a result of applying the fair value option, any debt issuance costs related to the convertible notes payable were expensed as incurred and were not deferred.

A variable interest entity ("VIE") is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains or losses of the entity. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC Topic 810, Consolidation ("ASC Topic 810"). These evaluations can be complex and judgmental, involving the use of estimates and assumptions based on available information among other factors. Based on these evaluations, if the Company determines it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE. The equity owned by other stockholders is presented, as applicable, as non-controlling interests in the accompanying condensed consolidated balance sheets, statements of operations, and statements of stockholders’ equity.

If a reconsideration event occurs under ASC Topic 810, the Company performs an assessment to determine whether the entity continues to be a VIE, whether the Company still contains a variable interest in the VIE, and whether the Company continues to be or has become the primary beneficiary of the VIE.

Cardionomix is a legal entity that was solely created to hold the assets of and to clinically develop and commercialize the CPNS System. The Company holds 82% of the voting, common stock, while the Company’s Chief Executive Officer and his affiliates hold 12%, and other third parties hold the remaining 6%. The Company determined that its controlling equity interest represents a variable interest in Cardionomix, which meets the definition of a VIE as it does not have sufficient equity at risk to finance its activities without additional subordinated financial support. Furthermore, the Company has determined that it is the primary beneficiary of the VIE as it has the power to direct the activities that most significantly impact the VIE’s economic performance through its controlling equity interest. The Company therefore consolidates the results of operations, assets, and liabilities of Cardionomix. The Company did not transfer any assets in exchange for its controlling equity interest in Cardionomix, which did not have any assets or liabilities at formation. Accordingly, the Company did not record any gain or loss upon initial consolidation.

As of March 31, 2026, Cardionomix only had a note payable with a carrying value of $1.4 million that was issued in May 2025 in connection with the asset acquisition. This note payable is presented under notes payable of variable interest entities, net of discount in the condensed consolidated balance sheets. Cardionomix does not hold any other material assets or liabilities as of March 31, 2026. Creditors of Cardionomix have no recourse to the Company’s general credit and their claims are limited solely to the assets of Cardionomix. Unless Cardionomix can obtain its own dedicated financing, the Company does not currently intend to allocate capital to fund the clinical development of the acquired assets.

The minority equity interest holders are presented as non-controlling interests in the accompanying condensed consolidated balance sheets, statements of operations, and statements of stockholders’ equity.

KardioNav is a legal entity that was solely created to hold the assets of and to clinically develop and commercialize certain intellectual property related to new cardiac technology. The Company holds 57% of the voting common stock, while the Company’s Chief Executive Officer and his affiliates hold 10%, and other third parties hold the remaining 33%. The Company determined that its controlling equity interest represents a variable interest in KardioNav, which meets the definition of a VIE as it does not have sufficient equity at risk to finance its activities without additional subordinated financial support. Furthermore, the Company has determined that it is the primary beneficiary of the VIE as it has the power to direct the activities that most significantly impact the VIE’s economic performance through its controlling equity interest. The Company therefore consolidates the results of operations, assets, and liabilities of KardioNav. The Company assigned certain intellectual property related to the VIVO System to KardioNav, which was accounted for as a common control transaction under ASC Topic 810 and carried at the Company's carrying value at inception. Furthermore, the fair value of the intellectual property assigned by Chelak to KardioNav was deemed to be de minimis as the intellectual property solely consists of patents and related know-how at the conceptual stage. Therefore, the Company recognized no gain or loss upon initial consolidation. Creditors of KardioNav have no recourse to the Company’s general credit and their claims are limited solely to the assets of KardioNav. Unless KardioNav obtains its own financing, the Company currently intends, to the extent it is able and subject to changes in circumstances, to provide financial support to KardioNav, until such time as KardioNav may have successfully completed research and development of its cardiac electrophysiology mapping technologies.

As of March 31, 2026, KardioNav's only assets or liabilities relate to accrued expenses of $17 thousand, and short-term notes payable of variable interest entities due to related parties with a carrying value of $309 thousand included in the condensed consolidated balance sheets. KardioNav does not hold any other material assets or liabilities.

The Company evaluates equity or liability classification for freestanding financial instruments, including convertible preferred stock, warrants, and options, pursuant to the guidance under ASC Topic 480, Distinguishing Liabilities from Equity (“ASC Topic 480”). The Company classifies as liabilities all freestanding financial instruments that are (i) mandatorily redeemable, (ii) represent an obligation to repurchase the Company’s equity shares by transferring assets, or (iii) represent an unconditional obligation (or conditional obligation if the financial instrument is not an outstanding share) to issue a variable number of shares predominantly based on a fixed monetary amount, variations in something other than the fair value of the Company’s equity shares, or variations inversely related to changes in fair value of the Company’s equity shares.

If a freestanding financial instrument does not represent an outstanding equity share and does not meet liability classification under ASC Topic 480, the Company then assesses whether the freestanding financial instrument is indexed to its own stock and meets equity classification pursuant to ASC Topic 815-40. The Company further assesses whether the freestanding financial instruments should be classified as temporary equity. Freestanding financial instruments that are redeemable for cash or other assets at a fixed or determinable date, at the option of the holder, or upon the occurrence of an event are classified in temporary equity in accordance with ASC Topic 480. Otherwise, the freestanding financial instruments are classified in permanent equity.

See Note 12, Equity Offerings and Note 13, Preferred Stock for additional information on the freestanding financial instruments assessed under ASC Topic 480 and ASC Topic 815-40 for equity or liability classification.

In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company accounts for contracts with customers when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. Revenue is measured as the amount of consideration expected to be received in exchange for transferring promised goods or services. The amount of consideration to be received and revenue recognized may vary due to discounts. A performance obligation is a promise in a contract to transfer a distinct good or service. If there are multiple performance obligations in the customer contract, the Company allocates the transaction price in the contract to each performance obligation based on the relative standalone selling price. The Company does not adjust revenue for the effects of a significant financing component for contracts if the period between the transfer of control and corresponding payment is expected to be one year or less. Revenue is recognized when performance obligations in the customer contract are satisfied. This generally occurs when the customer obtains control of a promised good at a point in time or when a customer receives a promised service over time.

Pursuant to ASC Topic 606, the Company applies the following five steps to each customer contract:

Step 4: Allocate the transaction price to the performance obligations in the contract

The Company has elected as a practical expedient to expense as incurred any costs incurred to obtain a contract as the related amortization period would be one year or less.

The VIVO System offers 3D cardiac mapping to help localize the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to electrophysiology studies. Customers are provided with VIVO Positioning Patch Sets, which are custom patches, that are used in conjunction with the VIVO System. The VIVO Positioning Patch Sets are integral to the functionality of the VIVO System. The VIVO System, including the VIVO Positioning Patch Sets, represents the Company’s primary performance obligation. The Company recognizes revenue when physical possession and control of the VIVO System is transferred to the customer upon delivery. The Company also offers customers software upgrades for the VIVO System, which may be purchased and paid in advance at contract inception. Software upgrades represent stand-ready services, whereby the Company promises to provide software upgrades to the customer when and as upgrades are available. Software upgrade services may be offered for initial contract terms of one to multiple years. Customers have the option to renew software upgrades services at the end of each term. The software upgrade services represent the Company's second performance obligation, which is recognized evenly over time over the contract term.

The Company invoices the customer for the VIVO System and related software upgrades after physical possession and control of the VIVO System has been transferred to the customer. Subsequent renewals for software upgrades are invoiced at inception of the renewed term. The timing of payment for the corresponding invoices depends on the credit terms identified in each customer contract. There were no software upgrade services revenues during the three months ended March 31, 2026 and 2025.

LockeT was launched by the Company in February 2023 and 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. The LockeT device represents a performance obligation in the customer contract. The Company recognizes revenue when it transfers control of the LockeT device to the customer, which happens when the Company delivers the product to the customer.

The Company generates revenue through two primary private aviation services: Hops and Luxe.

Hops refers to Flyte’s short-haul private charter service, through which Flyte arranges charter routes using leased jets and pilots dedicated to Flyte’s operations. These flights are conducted on Company-managed aircraft 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. Each flight represents a performance obligation. For Hops arrangements, the Company acts as the principal because it controls the specified flight service before it is transferred to the customer, is primarily responsible for operating and fulfilling the flight, and has discretion in establishing pricing. Accordingly, Hops revenue is presented on a gross basis in the condensed consolidated statements of operations. Revenue is recognized at a point in time 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 performance obligation is satisfied.

Luxe is the Company’s brokerage division, offering clients access to on-demand charters through a vetted network of independent third-party aircraft operators. For Luxe arrangements, the Company evaluates whether it controls the specified flight service before it is transferred to the customer or whether the Company’s performance obligation is to arrange for a third-party operator to provide the flight service. The Company has determined that it acts as an agent in Luxe arrangements because the third-party aircraft operator is primarily responsible for operating and fulfilling the flight, and the Company does not control the underlying flight service before it is provided to the customer. Accordingly, Luxe revenue is presented on a net basis in the condensed consolidated statements of operations and represents the commission, brokerage fee, or other net amount retained by the Company after amounts payable to the third-party aircraft operator.

For both Hops and Luxe, flights are earned and recognized as revenue at the point in time in which the service is provided, representing the satisfaction of the performance obligation. The Company 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.

The following table summarizes disaggregated revenue by geographic area (in thousands):

Deferred revenues primarily consist of contract liabilities and represent amounts billed to, or collected from, customers in advance of the Company satisfying the related performance obligations. Deferred revenue is recognized as revenue when, or as, the related performance obligations are satisfied in accordance with the terms of the underlying customer arrangements.

The Company’s contract liabilities were assumed in connection with the acquisition of FLYTE and relate to customer arrangements of the acquired business for which consideration had been received, or amounts had been billed, prior to the satisfaction of the related performance obligations. The Company had de minimis contract liabilities prior to the acquisition of FLYTE. As of March 31, 2026, the Company had no contract assets or receivables related to contracts with customers.

Deferred revenue is presented as a current liability in the condensed consolidated balance sheets to the extent the Company expects to recognize the related revenue within the next twelve months. The Company recognizes revenue from deferred revenue as the related products or services are transferred to customers.

The following table summarizes the changes in the deferred revenue balance as follows (in thousands):

Shipping and handling costs charged to customers are included in net product sales, while all other shipping and handling costs are included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. Advertising costs were $26 thousand and $83 thousand during the three months ended March 31, 2026 and 2025, respectively.

The Company expenses patent costs, including related legal costs, as incurred and records such costs as selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

Major components of research and development costs include consulting, research grants, supplies and clinical trial expenses. Research and development expenses are charged to operations in the period incurred.

The Company recognizes stock-based compensation expense associated with stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) issued to employees, members of the Company’s board of directors and consultants in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC Topic 718”). The Company evaluates whether stock-based awards should be classified and accounted for as liability or equity awards on the date of grant. Furthermore, the Company measures all stock-based awards granted based on their fair value on the date of grant. Stock options are measured at fair value using the Black-Scholes option pricing valuation model (the “Black-Scholes model”), which incorporates various assumptions, including expected term, volatility and risk-free interest rate. The expected term of the options is the estimated period of time until exercise and was determined using the SEC’s safe harbor rules, using an average of vesting and contractual terms, as the Company did not have sufficient historical experience of similar awards. Expected stock price volatility is based on historical volatilities of certain “guideline” companies, as the Company does not have sufficient historical stock price data. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent term. Stock-based compensation expense for all stock-based awards is recognized over the requisite service period, which is generally the vesting period of the respective stock award. Stock-based compensation expense for stock-based awards with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not probable or is not met, no stock-based compensation expense is recognized, and any previously recognized compensation expense is reversed. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur.

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Any resulting net deferred tax assets are evaluated for recoverability and, accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether it is more likely than not that the position will be sustained on an audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. An uncertain tax position is considered effectively settled on completion of an examination by a taxing authority if certain other conditions are satisfied. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and other income (expense), net respectively.

On July 4, 2025, the One Big Beautiful Bill Act, was signed into law. The legislation did not have a material impact on our income tax expense for the three months ended March 31, 2026.

Earnings per share attributable to Catheter Precision, Inc. common stockholders is calculated using the two-class method, which is an earnings allocation formula that determines earnings per share for the holders of the Company’s common shares and participating securities. The Company’s Series X Convertible Preferred Stock, of which no shares were outstanding as of March 31, 2026, as well as Series B Convertible Preferred Stock, Series C-1 Convertible Preferred Stock, Series J Convertible Preferred Stock, convertible notes payable and outstanding warrants are participating securities as they contain participating rights in distributions made to common stockholders. Since the participating securities do not include a contractual obligation to share in the losses of the Company, they are not included in the calculation of net loss per share in the periods that have a net loss. In addition, common stock equivalent shares (whether or not participating) are excluded from the computation of diluted loss per share in periods in which they have an anti-dilutive effect on net loss per common share.

Diluted net loss per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method and treasury stock method, as applicable. In periods in which the Company reports a net loss attributable to Catheter Precision, Inc. common stockholders, diluted net loss per share attributable to Catheter Precision, Inc. common stockholders is the same as basic net loss per share attributable to Catheter Precision, Inc. common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Diluted net loss per share is equivalent to basic net loss per share for the periods presented herein because common stock equivalent shares from outstanding warrants, stock options, convertible notes payable, Series B Convertible Preferred Stock, Series C-1 Convertible Preferred Stock, and Series J Convertible Preferred Stock were anti-dilutive (see Note 11, Net Loss per Share).

Net loss attributable to Catheter Precision, Inc. common stockholders consists of net income or loss attributable to Catheter Precision, Inc., as adjusted for actual and deemed dividends declared, if applicable.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires the disaggregation of certain costs and expenses in the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2027 and for interim periods beginning in 2028. The guidance may be applied on a prospective or retrospective basis and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its condensed consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"), which provides a practical expedient for entities to estimate expected credit losses on current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC Topic 606. ASU 2025-05 is effective for the Company for annual periods beginning after December 15, 2025, and interim periods within those annual periods. The adoption of this standard did not have a material effect on the Company’s condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements ("ASU 2025-11"), which is intended to clarify and improve certain aspects of interim financial reporting, including the requirements for interim disclosures and the application of recognition and measurement guidance in interim periods. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Adoption can be applied prospectively or retrospectively. The Company is currently evaluating the potential impact that ASU 2025-11 may have on its condensed consolidated financial statements and related disclosures. The Company does not expect this update to have a material effect on the Company's condensed consolidated financial statements.