In February 2023, the Company made payments of $4.7 million and $0.3 million to the DOJ and the participating states, respectively, pursuant to the terms of the Settlement Agreements.

On January 9, 2023, the Company completed the Merger for the purpose of acquiring Catheter’s existing and developing product lines based on electrophysiology technology. Pursuant to the Merger Agreement, the Company issued 14,649.591 shares of Series X Preferred Stock to Catheter debtholders and stockholders in exchange for 100% of the issued and outstanding common shares of Catheter and the cancellation of the principal amount.

The estimated total purchase consideration for the Merger was approximately $82.9 million which represents the sum of the (i) estimated fair value of the 14,649.591 Series X Preferred Stock issued and (ii) the portion of the estimated fair value of the options issued as replacement of share-based payment awards, as required under ASC 805.

The fair value of the Series X Preferred Stock includes certain discounts applied to the closing stock price of the Company on January 9, 2023 of $6.41, with a 15% discount applied to reflect the Series X Preferred Stock’s lack of marketability.

The following table summarizes the preliminary estimated fair value of the consideration associated with the Merger (in thousands):

Fair value of 14,649.591 Series X Preferred Stock issued	$	79,840
Fair value of Catheter's fully vested stock options		3,027
Total purchase price	$	82,867

The Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined the preliminary fair values of the assets acquired and liabilities assumed in the Merger. These values have been prepared based on preliminary estimates of fair value of consideration, assets acquired and liabilities assumed. Differences between these preliminary estimates and the final acquisition accounting are likely to occur and these differences could be material.

The following table summarizes the preliminary purchase price allocations related to the Merger (in thousands):

Estimated consideration	$	82,867
Assets (liabilities) assumed:
Cash and cash equivalents		33
Other assets		152
Long-term assets		145
Accounts payable, accrued expenses and other liabilities		(2,806	)
Royalties payable, long-term		(7,591	)
Intangible assets		37,000
Net assets assumed		26,933
Deferred tax liability		(10,108	)
Excess of consideration over net assets assumed	$	66,042

Excess of the purchase price over the estimated fair value of the net assets assumed has been reflected as goodwill.

All intangible assets acquired are subject to amortization and their associated estimated acquisition date fair values and estimated useful lives are as follows (in thousands except for estimated useful life which is in years):

	Estimated Fair Value		Estimated Useful Life
Developed technology – VIVO	$	8,020	8
Developed technology – LockeT		27,060	6
Customer Relationships		220	5
Trademark – VIVO		1,480	9
Trademark – LockeT		220	8
	$	37,000

ASC 805 requires that an acquirer in a business combination report provisional amounts when measurements are incomplete as of the end of the reporting period covering the business combination. In accordance with ASC 805, the acquirer has a period of time, referred to as the measurement period, to finalize the accounting for a

business combination. The measurement period provides companies with a reasonable period of time to determine the value of the identifiable assets acquired, liabilities assumed, and the consideration transferred for the acquiree. In accordance with ASC 805, the measurement period ends as soon as the acquirer receives all necessary information about the facts and circumstances that existed as of the acquisition date for the provisional amounts or has otherwise learned that more information is not obtainable. However, the measurement period cannot exceed one year from the acquisition date. ASC 805 requires that measurement period adjustments be recognized in the reporting period in which the adjustment amount is determined.

The following table represents the revenue, net loss and net loss per share effect of the acquired company, as reported on a pro forma basis as if the acquisition occurred on January 1, 2022. These pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods. The following information for the year ended December 31, 2022 is presented in thousands except for the per share data:

Revenues	$	355
Net loss		(41,559	)
Basic and diluted net loss per share – on a pro forma basis (unaudited)		(22.30	)

On March 21, 2023, the Company held a special meeting of stockholders (the “Stockholders’ Meeting”), at which the stockholders approved, among other things, the issuance of 1,993,627 shares of common stock upon the conversion of 1,993.627 of Series X Preferred Stock which were issued upon the closing of the Merger. The remaining 12,655.965 shares of Series X Preferred Stock are expected to remain outstanding until at least July 9, 2024, and will convert thereafter into up to 12,655,965 shares of common stock, only if the Company meets the initial listing standards of the NYSE American or another national securities exchange or are delisted from the NYSE American.

On January 9, 2023, the Company reduced the exercise price of certain existing warrants, or the Existing Warrants, exercisable for 331,608 shares of the Company’s common stock held by a certain investor (the “Investor”), with exercise prices ranging from $14.00 to $526.50 per share to $4.00 per share, or the Warrant Repricing. In connection with the Warrant Repricing, the Company entered into a warrant inducement offer letter, or the Inducement Letter, with the Investor pursuant to which it would exercise up to all of the 331,608 Existing Warrants, or the Inducement Offer. In consideration for exercising the Existing Warrants pursuant to the terms of the Inducement Letter, the Company received approximately $1.3 million in gross proceeds. The Company paid the placement agent aggregate cash fees of approximately $0.2 million related to the Inducement Offer which represented 8.0% of the gross proceeds received from the Inducement Offer plus other offering costs. In consideration for exercising the Existing Warrants pursuant to the terms of the Inducement Letter, the Company issued the Investor a new Series E common stock purchase warrant, or Series E Warrant, to purchase 331,608 shares of common stock at an exercise price of $4.00 per share. The Series E Warrant is exercisable for five years from the date of stockholder approval. Exercise of the Series E Warrant in full was subject to approval of the pre-closing holders of Ra Medical’s stockholders which was obtained at the Stockholders’ Meeting.

Based on the Black Scholes model, the Warrant Repricing resulted in an immediate and incremental increase of approximately $0.3 million in the estimated fair value of the Existing Warrants which will be reported in the statement of stockholders’ equity for the three months ending March 31, 2023. In addition, based on the Black-Scholes model, the Company estimated the fair value of the Series E Warrant issued to be approximately $1.9 million.

On January 9, 2023, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) for a private placement (“Private Placement”), with the Investor. Pursuant to the Securities Purchase Agreement, the Investor agreed to purchase, for an aggregate purchase price of approximately $8.0 million, (a) Class A units at a price that is the lower of $3.00 per unit and 90% of the 5 day volume weighted average price of the Company’s common stock immediately prior to obtainment of the approval of the Company’s stockholders of conversion of the PIPE Preferred Stock and PIPE Warrants (as each are defined below), each consisting of one share of common stock, one Series F common stock purchase warrant, or Series F Warrant, and one Series G common stock purchase warrant, or Series G Warrant, and together with the Series F Warrants (the “PIPE Warrants”) and (b) Class B units at a price of $1,000 per unit, each consisting of one share of a new series of the Company’s preferred stock, designated as Series A Convertible Preferred Stock (the “PIPE Preferred Stock”), par value $0.0001, and one Series F Warrant and one Series G Warrant for each share of the Company’s common stock underlying the PIPE Preferred Stock (each share of which is convertible into a number of shares of the Company’s common stock equal to $1,000 divided by the lower of $3.00 and 90% of the 5 day volume weighted average closing price of the Company’s common stock immediately prior to the obtainment of the approval of the Company’s stockholders of conversion of the PIPE Preferred Stock and PIPE Warrants, or the Preferred Conversion Rate. The closing under the Securities Purchase Agreement and the sale and issuance of the Class A units and Class B units (and the issuance of any underlying common stock) were approved at the Stockholders’ Meeting. At the closing of the Private Placement, the Company issued 497,908 Class A units for proceeds of approximately $0.8 million and 7,203 Class B units for proceeds of approximately $7.2 million which are convertible into up to 4,501,060 shares of common stock, as well as the issuance of warrants described below.

The PIPE Warrants are exercisable at an exercise price of $3.00 per share, subject to adjustments as provided under the terms of the PIPE Warrants. The PIPE Warrants are exercisable at any time on or after the closing date of the Private Placement until the expiration thereof, except that the PIPE Warrants cannot be exercised if, after giving effect thereto, the purchaser would beneficially own more than 4.99%, or the Maximum Percentage, of the outstanding shares of common stock of the Company, which Maximum Percentage may be increased or decreased by the purchaser with written notice to the Company to any other percentage specified not in excess of 9.99%. The Series F Warrants have a term of two years from the date of stockholder approval, and the Series G Warrants have a term of six years from the date of stockholder approval. The Series F Warrants and Series G Warrants were approved at the Stockholders’ Meeting.

Shares of PIPE Preferred Stock, the conversion of which was approved at the Stockholders’ Meeting, convert into common stock at the option of the holder at the Preferred Conversion Rate, subject to certain ownership limitations as described below. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.

Subject to limited exceptions, holders of shares of PIPE Preferred Stock will not have the right to convert any portion of their Preferred Stock if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or up to 9.99% at the election of the holder) of the number of shares of the Company’s common stock outstanding immediately after giving effect to its conversion.

Holders of PIPE Preferred Stock will be entitled to receive dividends on shares of PIPE Preferred Stock equal, on an as-if-converted-to-common stock basis, and in the same form as dividends actually paid on shares of the common stock. Except as otherwise required by law, the PIPE Preferred Stock does not have voting rights.

The Company also entered into a registration rights agreement with the purchasers requiring the Company to register the resale of the shares of common stock, the shares issuable upon exercise of the Warrants and the shares issuable upon the conversion of the PIPE Preferred Stock.