DEF: Catheter Precision Seeks Shareholder OK for Capital, Reverse Split

Catheter Precision, Inc. calls a Special Meeting to approve significant preferred stock issuances, an acquisition, and a reverse stock split to meet NYSE American listing requirements and fund operations.

Summary

• A Special Meeting of stockholders will be held on April 15, 2026, at 11:00 a.m. Eastern Standard Time, via internet webcast.
• Stockholders will vote on six proposals, including authorizing the issuance of common stock underlying Series C, D, J, and B convertible preferred stock, and approving a reverse stock split.
• The company entered into Series C Private Placements on February 6, 2026, and March 9, 2026, yielding initial gross proceeds of $1,617,000 and $1,853,000, respectively, with potential for up to an aggregate of $88,216,667.67 from additional Series C preferred stock.
• The Series D Preferred Stock is being issued as consideration for the acquisition of 100% of Fly Flyte, Inc. (FLYTE) and 100% of Ponderosa Air, LLC, with total consideration for the subsequent acquisition being $11,554,827 ($5,776,827 cash and $5,778,000 in Series D Preferred Stock).
• Series J Preferred Stock was issued to David A. Jenkins (Executive Chairman and CEO) and FatBoy Capital, L.P. (controlled by Mr. Jenkins) to convert $9,489,487.81 in accrued royalty rights as of December 31, 2025.
• The conversion price of Series B Preferred Stock was reduced from $6.65 to $1.78 per share, increasing the underlying common shares from 335,214 to 1,252,344, and generating $401,504 from warrant exercises.
• The reverse stock split proposal allows the Board to effect a split at a ratio between 1-for-2 and 1-for-100, at its discretion, within one year of stockholder approval, primarily to comply with NYSE American's $1 minimum bid price rule.
• All preferred stock issuances require stockholder approval to comply with NYSE American LLC Company Guide Section 713(a) due to the potential issuance of more than 19.99% of outstanding common stock at a price below market value.
• The Board of Directors unanimously recommends voting FOR all six proposals.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a distressed company attempting a significant strategic pivot and capital restructuring under duress, with substantial dilution for existing common shareholders and inherent risks in the new strategy and reverse stock split.

Positives

• The company secured significant capital through Series C private placements, with potential for up to $88.2 million, addressing immediate funding requirements.
• The acquisition of FLYTE and Ponderosa Air, LLC provides a foundation for a focused, high-growth aviation strategy and aims to simplify the balance sheet and streamline legacy operations.
• The conversion of accrued royalty rights into Series J Preferred Stock terminates royalty obligations, which is expected to materially benefit the company's financial statements and position.
• The reduction of the Series B conversion price facilitated the exercise of Series L Warrants, generating $401,504 in cash proceeds.
• The proposed reverse stock split is a proactive measure to comply with NYSE American listing requirements, specifically the $1 minimum bid price rule, and potentially attract institutional investors.

Negatives

• The various preferred stock issuances (Series C, D, J, and B) will result in significant dilution for current common stockholders, potentially increasing the number of outstanding common shares by hundreds of millions.
• Conversion prices for Series C and D preferred stock are subject to downward adjustments (80% of the Applicable Price, with a $0.35 floor), which could lead to even greater dilution.
• The company explicitly stated that the Series C Private Placements and Private Placement Acquisitions were the 'only viable financing alternatives available,' indicating a challenging financial position and limited options.
• The reverse stock split, while intended to raise the per-share price, carries risks such as no assurance of a sustained higher price, potential for further decline, reduced liquidity, and the creation of odd lots for some stockholders.
• Failure to obtain stockholder approval for the preferred stock issuances will incur additional costs for repeated stockholder meetings every 90 days and prevent the issuance of common stock upon conversion.

Risks

• Failure to obtain stockholder approval for the issuance of common stock underlying Series C, D, J, and B preferred stock could lead to additional costs for repeated meetings and inability to issue shares upon conversion.
• Significant dilution of existing common stockholders' percentage ownership, voting power, liquidation value, book and market value, and future earnings due to the conversion of preferred stock.
• The issuance or resale of common stock from preferred conversions could cause the market price of the common stock to decline.
• The reverse stock split may not result in a sustained increase in the market price of the common stock, may not attract institutional investors, and could lead to reduced liquidity or a greater percentage decline if the price falls.
• Risk of delisting from NYSE American if the company fails to satisfy continued listing requirements, including the $1 minimum bid price rule, even after a reverse stock split.
• The company may have difficulty finding alternative sources of capital to fund operations in the future on favorable terms or at all if current proposals are not approved or if further funding is needed.

Future Outlook

The company aims to establish a focused, high-growth aviation strategy through the acquisition of FLYTE and Ponderosa Air, LLC, while also simplifying its balance sheet and streamlining legacy operations. The proposed reverse stock split is intended to help meet NYSE American listing requirements and potentially attract institutional investors. If stockholder approval for the preferred stock issuances is not obtained, the company is committed to calling additional stockholder meetings every 90 days until such approval is secured.

Management Comments

• "We are pleased to invite you to attend the special meeting of stockholders..."
• "Your vote is important. Regardless of whether you plan to attend the Special Meeting, it is important that your shares be represented and voted at the Special Meeting, and we hope you will vote as soon as possible."
• "We believed that the Series C Private Placements were the only viable financing alternatives available to us at the time."
• "We believed that the Private Placement Acquisitions were the only viable alternatives available to us at the time to execute on our aviation strategy."
• "We believe the Exchange Agreements and the issuance of the Series J Preferred Stock resulted in a material benefit to the financial statements and position of the Company."
• "Our Board of Directors considered the pros and cons of such reduction versus other alternatives for raising capital, and the immediate working capital needs of the Company, and determined that the reduction in the conversion price to the Series B Preferred Stock was in the best interests of the Company and its stockholders."

Industry Context

StockSavvy.ai notes that the company's pivot to an "aviation strategy" through the FLYTE and Ponderosa Air, LLC acquisitions represents a significant strategic shift from its implied original focus (Catheter Precision suggests medical devices). This move, coupled with substantial capital raises via highly dilutive convertible preferred stock, indicates a company undergoing a major transformation, likely driven by a critical need for capital and a re-evaluation of its core business. The necessity for a reverse stock split is a common tactic for companies facing delisting from exchanges like NYSE American due to persistently low share prices, often signaling underlying operational or market challenges.

Comparison to Industry Standards

• StockSavvy.ai observes that the extensive use of convertible preferred stock with variable conversion prices and significant potential dilution is a common financing mechanism for micro-cap companies in distress or undergoing significant strategic shifts, but it comes at a high cost to existing common shareholders.
• The terms, including conversion price adjustments to 80% of the Applicable Price and a low Floor Price ($0.35), are aggressive and indicative of a company needing capital urgently, similar to financing rounds seen in highly speculative ventures or companies facing liquidity issues, rather than established, stable growth companies.
• The reverse stock split ratio range (1-for-2 to 1-for-100) is broad, giving the board maximum flexibility, which is typical for companies trying to meet minimum bid price requirements, but also highlights the uncertainty regarding the necessary price adjustment.
• The acquisition of FLYTE and Ponderosa Air, LLC, while presented as a "focused, high-growth aviation strategy," lacks specific financial projections or comparable company valuations within the filing to assess its immediate or long-term value relative to industry benchmarks in the aviation sector.

Corporate Governance

Related Party Transactions

• Series J Exchange Agreements: David A. Jenkins (Executive Chairman and Chief Executive Officer) and FatBoy Capital, L.P. (controlled and owned by Mr. Jenkins) received 9,489.488 shares of Series J Convertible Preferred Stock in exchange for accrued royalty rights totaling $9,489,487.81 as of December 31, 2025. Mr. Jenkins abstained from the Board vote approving these terms.

Stakeholder Impact

• **Shareholders**: Will experience significant dilution of their percentage ownership, voting power, liquidation value, book and market value, and future earnings due to the conversion of various series of preferred stock into common stock. The reverse stock split may increase the per-share price but carries risks of further price decline and reduced liquidity. Holders of fractional shares post-split will receive cash in lieu of shares.
• **Preferred Stock Holders (Series C, D, J, B)**: Will benefit from the conversion rights into common stock, potentially at adjusted favorable prices, and are critical to the company's current financing and strategic initiatives.
• **Management/Board**: The Board's discretion in implementing the reverse stock split and the terms of the preferred stock issuances (including related party transactions) highlight their active role in navigating the company's financial and strategic challenges.
• **Creditors**: The capital raises and the termination of royalty obligations (via Series J Preferred Stock) could improve the company's overall financial health and liquidity, potentially benefiting other creditors by strengthening the balance sheet.

Next Steps

• Hold a Special Meeting of stockholders on April 15, 2026, to vote on the proposed issuances and reverse stock split.
• If preferred stock issuances are not approved, the company is required to call additional stockholder meetings every 90 days thereafter to seek approval until it is obtained or the shares are no longer outstanding.
• If the reverse stock split is approved, the Board will determine the specific ratio (between 1-for-2 and 1-for-100) and the effective date prior to the one-year anniversary of the Special Meeting.
• File a Current Report on Form 8-K with the SEC to disclose preliminary voting results within four business days after the Special Meeting, and final results within four business days after they are known.
• Prepare and file registration statements with the SEC for the resale of common stock underlying the Series C and D preferred shares no later than 30 days following their respective closing dates.

Key Dates

Recommendation

The filing reveals a company in a precarious financial state, resorting to highly dilutive financing methods and a reverse stock split to maintain its exchange listing. The strategic pivot to aviation, while potentially offering growth, is being funded at a significant cost to existing common shareholders. The substantial dilution, coupled with the inherent risks of a reverse stock split and the company's stated difficulty in finding alternative financing, suggests a high-risk investment with significant downside for current common equity holders. A seasoned investor would likely view this as a signal to exit or avoid the common stock due to the severe dilution and underlying financial distress.

Keywords

Catheter Precision, VTAK, SEC filing, proxy statement, special meeting, preferred stock, convertible securities, reverse stock split, stock dilution, capital raise, acquisition, FLYTE, Ponderosa Air, NYSE American, listing requirements, corporate governance, David A. Jenkins, FatBoy Capital, private placement, financial restructuring