RMED Ra Medical Systems Inc

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available. This section should be read in conjunction with our unaudited condensed financial statements and related notes included in Part I, Item 1 of this report. The statements contained in this Quarterly Report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements can be identified by words such as “believe,” “anticipate,” “may,” “might,” “can,” “could,” “continue,” “depends,” “expect,” “expand,” “forecast,” “intend,” “predict,” “plan,” “rely,” “should,” “will,” “may,” “seek,” or the negative of these terms or and other similar expressions, although not all forward-looking statements contain these words. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including, but not limited to, those described in Risk Factors. These forward-looking statements 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. We discuss many of these risks in greater detail in the section entitled Risk Factors included in Part II, Item 1A and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these 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”, “Ra” and “the Company” refer to Ra Medical Systems, Inc.

Overview

Ra Medical Systems, Inc. is a medical device company that owns intellectual property related to an advanced excimer laser-based platform for use in the treatment of vascular immune-mediated inflammatory diseases. We believe our products enhance patients’ quality of life by restoring blood flow in arteries.

The DABRA laser and single-use catheter, together referred to as the DABRA Excimer Laser System, or DABRA, is used as a tool in the treatment of peripheral artery disease, or PAD, which commonly occurs in the legs. DABRA is cleared by the U.S. Food and Drug Administration, or FDA, as a device for crossing chronic total occlusions in patients with symptomatic infrainguinal lower extremity vascular disease and with an intended use for ablating a channel in occlusive peripheral vascular disease. DABRA was also granted CE mark approval in Europe in September 2016 for the endovascular treatment of infrainguinal arteries via atherectomy and for crossing total occlusions.

As previously disclosed, the board of directors initiated a strategic review of options for increasing shareholder value earlier this year.

Pending Merger

On September 12, 2022, we announced entering into an Agreement and Plan of Merger, or the Merger Agreement, with privately held Catheter Precision, Inc., or Catheter, a medical device and technology company focused in the field of cardiac electrophysiology. Under the terms of the Merger Agreement, Catheter will become a wholly owned subsidiary of Ra Medical in a stock-for-stock reverse merger transaction, or the Merger. If completed, the Merger will result in a combined publicly

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traded company that will focus on the cardiac electrophysiology market. Our board of directors and the board of directors of Catheter have both approved the Merger, which is currently expected to close before the end of 2022 or early 2023, subject to satisfying certain closing conditions, including the receipt of shareholder approval by both companies.

We expect that we will need to raise additional financing in an amount of between $2.0 million and $3.0 million in order to consummate the pending merger with Catheter in order to meet the $8.0 million “Net Cash” closing requirement under the Merger Agreement and additional original listing requirements of the NYSE American. Our stockholders should carefully read the section of this Quarterly Report and in the amended preliminary proxy statement filed on November 4, 2022, or the Amended Preliminary Proxy, entitled Risk Factors – We anticipate needing to raise additional funds in order to consummate the Merger with Catheter. Future sales and issuances of a substantial number of shares of our common stock or rights to purchase common stock by our stockholders in the public market are likely to result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall. Such financings may have terms or rights superior to those of our shares of common stock and may not be on favorable terms to us, which could adversely affect the market price of our shares of common stock and our business or the rights of our stockholders. In addition, we need to meet certain minimum pricing conditions under the Merger Agreement and the listing standards of the NYSE American stock exchange in order for the Merger to close and our shares to continue to be listed on the NYSE American. Our stockholders should carefully read the sections of this Quarterly Report and in the Amended Preliminary Proxy entitled Risk Factors – Because the merger agreement requires that each of (x) the last closing sale price of Ra Medical common stock prior to 4:00 p.m. (New York City time) on the last trading day prior to the closing is equal to or greater than $4.50, and (y) the average of the last closing sale price of Ra Medical common stock prior to 4:00 p.m. (New York City time) on each of the five (5) consecutive full trading days prior to the closing is equal to or greater than $4.50, then we may be unable to consummate the merger should our closing sale price be or continue to be below $4.50, and we may seek to take additional action in order to address the closing sale price of our stock. and The initial listing application to be filed with the NYSE American in order to continue the listing of the shares of common stock of the combined company on the NYSE American may not be approved if the combined company does not meet the initial listing standards.

Reverse Stock Split

On September 20, 2022, our board of directors approved a reverse stock split ratio of 1-for-50, or the Reverse Stock Split. On the effective date of October 3, 2022, the number of our issued and outstanding shares of common stock was decreased from 68.2 million shares to 1.4 million shares. The number of authorized shares and par value per common share remained unchanged. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who would otherwise have been entitled to receive a fractional share received a cash payment in lieu thereof. The financial statements have been retrospectively adjusted to reflect the Reverse Stock Split of our common stock for all periods presented.

At-The-Market Sales Agreement

On September 2, 2022, we entered into an At-The-Market Sales Agreement, or ATM Agreement, with Ladenburg Thalmann & Co., Inc. Under the ATM Agreement, we could sell our common stock from time to time having an aggregate offering price of up to $7.6 million. We completed sale of 1.1 million shares of common stock under the offering on October 7, 2022, resulting in net proceeds of $7.4 million, after deducting offering fees.

NYSE American

On August 31, 2022, we received a deficiency letter, or the Letter, from NYSE American indicating that we are not in compliance with NYSE American continued listing standards as set forth in Section 1003(f)(v) of the NYSE American Company Guide because our shares of common stock have been selling for a substantial period of time at a low price per share, which NYSE American determined to be a 30 trading day average price of less than $0.20 per share. The Letter has no immediate effect on the listing or trading of our common stock, and the common stock continues to trade on NYSE American under the symbol “RMED.” We believe that the aforementioned Reverse Stock Split and accompanying increase in the daily share price of our common stock cured this deficiency, however, we have not received confirmation from NYSE American as of the date of this Quarterly Report.

Clinical Study

As previously reported, our strategy was to pursue an atherectomy indication for use, which the FDA defines to include a prespecified improvement in luminal patency. We received an Investigational Device Exemption, or IDE, approval in January 2020, and the study was approved for up to 10 clinical sites and 100 subjects. In January 2022, primarily due to subject fallout for follow-up visits due to COVID-19, we filed a protocol amendment with the FDA to add up to an additional 25 subjects to

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the study. The protocol amendment was approved by the FDA in February 2022, raising the enrollment limit from a maximum of 100 subjects to 125 subjects.

We enrolled the first subject in the atherectomy clinical study in February 2020. Throughout much of 2021 and 2020, the COVID-19 pandemic substantially impacted our ability to activate new sites and enroll additional subjects. Many sites or potential sites have been or are currently operating at a reduced capacity, and some have been closed from time to time.

On June 6, 2022, we made the decision to stop enrollment at 108 subjects in the atherectomy clinical study, and we believe we have enough subjects to eventually satisfy the FDA’s data requirements to support an atherectomy indication. Although the COVID-19 pandemic has had and will continue to have an unpredictable impact on subject follow-up in this study, we currently aim to complete the six-month follow-up before the end of 2022 or early 2023.

Reduction in Force and Operations

As previously reported, the board of directors approved a reduction in force, or RIF, under which approximately 65% of our full-time employees were immediately terminated, effective June 6, 2022, and provided one-time severance payments totaling approximately $0.6 million. In August and September 2022, an additional 20% of our employees were terminated and were provided one-time severance payments totaling approximately $0.3 million. The purpose of the RIF was to preserve capital with the goal of maximizing the opportunities available to us during the board of directors’ review of strategic alternatives.

As a result of the RIF and the board of directors’ review of strategic alternatives, we have paused all engineering activities, including the development of a version of the DABRA catheter that is compatible with a standard interventional guidewire as well as research to prove the feasibility of using a DABRA-derived catheter technology to fracture calcium in arteries in a procedure known as lithotripsy. On July 5, 2022, we announced the receipt of FDA 510(k) clearance for the DABRA 2.0 catheter as part of the DABRA Excimer Laser System. This catheter includes a braided over jacket to make the catheter more robust and more kink-resistant when navigating tortuous anatomy. This catheter also has a six-month shelf life as a result of multiple design and manufacturing remediations implemented to address prior limitations. We currently have no plans to commercialize the DABRA 2.0, pending the closing of the Merger.

As a result of the RIF, the discontinuation of both the enrollment in the clinical study and engineering activities and the board of directors’ ongoing review of strategic alternatives, we have suspended all manufacturing activities and are no longer supplying catheters to any sites.

Warrant Repricing

On July 22, 2022, we reduced the exercise price of all outstanding warrants, consisting of Series A and Series B warrants that were issued in the February 2022 public offering, from $25.00 per share to $14.00 per share, or the Warrant Repricing. Following the Warrant Repricing, we entered into warrant inducement offer letters, or the Inducement Letters, with certain investors to immediately exercise all of the Series A and Series B warrants held by such investors. In response to the Inducement Letters, investors exercised approximately 0.4 million Series A warrants and no Series B warrants. Investors who exercised their Series A warrants received Series C warrants to purchase 100% of the shares exercised pursuant to the Series A warrants with an exercise price of $14.00 per share and a term of five years. We received net proceeds of approximately $4.9 million from the exercises of the Series A warrants, after deducting underwriter commissions and fees withheld of $0.6 million and other offering expenses paid or payable of $0.7 million. The Series C warrants and the shares underlying the Series C warrants are unregistered and were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, or the Securities Act.

The Warrant Repricing resulted in an immediate and incremental increase of approximately $2.3 million in the estimated fair value of the Series A warrants and Series B warrants. The estimated fair value of the Series C warrants issued in the Warrant Repricing was approximately $2.3 million.

We are contractually obligated to pay a former placement agent tail fees on the proceeds received from the Series A warrant exercises and the issuance of the Series C warrants. The tail fees consist of cash tail fees equal to 7.5% cash compensation for the gross proceeds raised in the exercises of the Series A warrants in response to the Inducement Letters and the issuance of warrants equal to 7% of the number of shares of common stock issued, or the Tail Fees, to any investor contacted by the former placement agent during the term of its engagement with us. Therefore, the Tail Fees we are contractually obligated to pay related to the exercises of the Series A warrants in response to the Inducement Letters consist of a cash fee of approximately $0.5 million and the issuance of a warrant to purchase approximately 31,000 shares of common stock at an exercise price of $17.50 per share which represents 125% of the exercise price of the Series C warrants. The warrants

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were valued at approximately $0.2 million on the Warrant Repricing date and would be immediately exercisable and expire five years from their issuance date. We had not issued this warrant as of the date of this Quarterly Report.

Going Concern

As of the date of this Quarterly Report, we concluded that there is substantial doubt regarding our ability to continue as a going concern for the twelve months from the date of filing of this Quarterly Report. Substantial doubt about a company’s ability to continue as a going concern is generally viewed unfavorably by current and prospective investors, as well as by analysts and creditors and potential strategic partners. As a result, it may be more difficult for us to consummate any strategic transactions and/or raise the additional financing necessary to continue to operate our business. If the Merger is not consummated, we may be forced to refocus or rebuild around a different core or strategic technology, consummate another strategic transaction or be required to liquidate our assets and dissolve the Company. If the Merger is completed, the combined entity may not have sufficient cash to fund its operations for next year. Catheter has historically generated negative cash flows from operations. Catheter’s expected revenue growth may not be achieved, and expenditures to achieve growth may exceed expectations.

COVID-19

The global effects of COVID-19 have created significant volatility, uncertainty and economic disruption. Although restrictions have been recently eased around the world, the COVID-19 pandemic is still ongoing, and the ultimate effects of COVID-19 on our business, operations and financial condition are unknown at this time. We expect that patient follow-up in our atherectomy clinical trial may continue to be affected by the uncertainty relating to COVID-19, as patients may continue to elect to postpone follow-up visits and physicians’ offices may intermittently close or operate at a reduced capacity in response to COVID-19. However, the extent to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain it or treat its impact, among others.

Components of our Results of Operations

Net Revenue

Product sales consist of the sales of catheters for use with the DABRA laser. We are no longer selling commercial product or catheters for use in our atherectomy clinical trial.

Cost of Revenue

Cost of revenue for product sales consists primarily of costs of components for use in our products, the labor that is used to produce our products, and the manufacturing overhead that support production. Cost of revenue for service and other consists primarily of depreciation on the lasers we owned.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses primarily consist of employee-related expenses, including salaries, benefits and stock-based compensation expense. Other SG&A expenses include professional services fees, including legal, audit and tax fees, insurance costs, general corporate expenses and facility related expenses.

Research and Development Expenses

Research and development, or R&D, expenses primarily consist of employee-related expenses, including salaries, benefits and stock-based compensation expense. Other R&D expenses include the cost of clinical studies and trials, supplies

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used for internal R&D and clinical activities and the cost of outside consultants who assist with technology development and clinical affairs.

Net Revenue

We had no revenue during the three months ended September 30, 2022, due to the decision to cease manufacturing activities in June 2022. Net revenue decreased during the nine months ended September 30, 2022 as compared to the corresponding period in the prior year since we were only selling catheters to clinical trial sites while we focused our efforts on remedying the inconsistencies in our DABRA catheter performance and obtaining an atherectomy indication.

Cost of Revenue

The decreases in cost of revenue of $0.2 million and $1.1 million for the three and nine months ended September 30, 2022, respectively, as compared to the corresponding periods in the prior year were primarily due to the discontinuation of manufacturing activities in June 2022.

Selling, General and Administrative Expenses

The decrease in SG&A expenses of $0.7 million for the three months ended September 30, 2022 as compared to the corresponding period in the prior year was due to decreases of $0.6 million in personnel and consulting expenses, primarily due to the RIF, and $0.1 million in legal expenses. SG&A expenses for the three months ended September 30, 2022 of $3.5 million primarily consisted of legal expenses of $1.5 million, personnel and consulting expenses of $1.0 million and insurance costs of $0.4 million.

The decrease in SG&A expenses of $3.0 million for the nine months ended September 30, 2022 as compared to the corresponding period in the prior year was due to decreases of $1.2 million in stock-based compensation expense, $0.9 million in legal expenses, $1.1 million in personnel and consulting expenses, $0.2 million in insurance expense and $0.1 million in other costs, partially offset by a gain on sale of assets of $0.5 million. SG&A expenses for the nine months ended September 30, 2022 of $8.3 million primarily consisted of personnel and consulting expenses of $3.5 million, legal expenses of $1.5 million and insurance costs of $1.4 million.

Research and Development Expenses

The decrease in R&D expenses of $2.2 million for the three months ended September 30, 2022 as compared to the corresponding period in the prior year was due to the decreases in personnel and consulting expenses of $1.5 million, $0.5 million in R&D supplies and $0.2 million in clinical study expenses due to the RIF and the decrease in R&D activity.

The decrease in R&D expenses of $2.3 million for the nine months ended September 30, 2022 as compared to the corresponding period in the prior year was due to decreases of $2.0 million in personnel and consulting expenses, $0.2 million in stock-based compensation expense and $0.2 million in R&D supplies, partially offset by an increase of $0.1 million in other expenses.

Restructuring and Impairment Charges

Restructuring and impairment charges of $0.5 million and $4.1 million for the three and nine months ended September 30, 2022, respectively, include the one-time severance expenses incurred due to the RIF, as well as impairment and inventory obsolescence charges and other expenses due to our decision to discontinue enrollment of patients in our clinical trial, cease

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manufacturing activities, sell or dispose of substantially all of our property and equipment and inventories and expense prepaid R&D supplies.

Other Income, Net

Other income, net remained flat for the three months ended September 30, 2022 as compared to the corresponding period in the prior year. The decrease in other income, net of $2.0 million for the nine months ended September 30, 2022 as compared to the corresponding period in the prior year was primarily due to the forgiveness of the Paycheck Protection Plan promissory note in 2021.

Non-GAAP Measures

EBITDA and Adjusted EBITDA are performance measures that provide supplemental information we believe is useful to analysts and investors to evaluate our ongoing results of operations, when considered alongside other GAAP measures. These non-GAAP measures exclude the financial impact of items management does not consider in assessing our ongoing operating performance, and thereby facilitate review of our operating performance on a period-to-period basis.

We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations are that:

In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

A reconciliation for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP is included below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. We define Adjusted EBITDA as our GAAP loss from continuing operations as adjusted to exclude depreciation and amortization, interest income, interest expense, income tax expense, stock-based compensation, restructuring and impairment charges, loss (gain) on sales and disposals of property and equipment and gain on extinguishment of promissory note.

The following is a reconciliation of loss from continuing operations to Adjusted EBITDA (in thousands):

The decrease in negative Adjusted EBITDA of $2.9 million and $4.7 million for the three and nine months ended September 30, 2022, respectively, as compared to the corresponding periods in the prior year were primarily due to the decreases in personnel and consulting expenses, primarily due to the RIF, of $2.1 million and $3.1 million for the three and nine

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months ended September 30, 2022, respectively. In addition, legal expenses decreased by approximately $0.9 million for the nine months ended September 30, 2022 as compared to the corresponding period in the prior year primarily due to lower legal expenses related to the securities litigation and prior investigation.

Liquidity and Capital Resources

As of September 30, 2022, we had cash and cash equivalents of $13.7 million. We will continue to monitor our operating costs and seek to reduce our current liabilities. Such actions may impair our ability to proceed with certain strategic activities, and we may be unsuccessful at negotiating existing liabilities to our benefit. If these efforts are unsuccessful or the Merger is not completed, our cash position could be negatively impacted and we may, among other things, be required to seek other sources of financing, consummate another strategic transaction or be required to liquidate our assets and dissolve the Company. Because of the significant uncertainty regarding our future plans, we are not able to accurately predict the impact of a potential change in our business strategy and future funding requirements.

Management believes that, based on the Company’s liquidity resources and the significant uncertainty regarding its future plans, there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of the financial statements. The Company’s independent registered public accounting firm expressed substantial doubt regarding the Company’s ability to continue as a going concern in its report on the Company’s financial statements as of and for the year ended December 31, 2021.

Although we improved our liquidity resources during 2022 with proceeds from a private placement, warrant exercises and the ATM financing, resulting in total net proceeds of $23.5 million, and we may receive additional funds from the exercise of warrants depending on market conditions, management has concluded that the aforementioned conditions continue to raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of the financial statements. We expect that we will need to raise additional financing in an amount of between $2.0 million and $3.0 million in order to consummate the potential merger with Catheter in order to meet the $8.0 million “Net Cash” closing requirement under the Merger Agreement and additional original listing requirements of the NYSE American. Our stockholders should carefully read the section of this Quarterly Report and the Adjusted Preliminary Proxy entitled Risk Factors – We anticipate needing to raise additional funds in order to consummate the Merger with Catheter. Future sales and issuances of a substantial number of shares of our common stock or rights to purchase common stock by our stockholders in the public market are likely to result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall. Such financings may have terms or rights superior to those of our shares of common stock and may not be on favorable terms to us, which could adversely affect the market price of our shares of common stock and our business or the rights of our stockholders. Management plans to address this uncertainty by raising additional funds, if necessary, through public or private equity or debt financings as well as by engaging in regular and ongoing reviews of its strategic options to help ensure that the Company is focusing its cash resources on advancing its key corporate initiatives. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all. Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders.

Further, SEC regulations limit the amount of funds we can raise during any 12-month period pursuant to our effective shelf registration statement on Form S-3. We are currently subject to General Instruction I.B.6 to Form S-3, or the Baby Shelf Rule, and the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the voting and non-voting common equity held by non-affiliates. We are currently limited by the Baby Shelf Rule as of the filing of this Quarterly Report, until such time as our public float exceeds $75 million.

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Net Cash Used in Operating Activities

Net cash used in operating activities of $19.5 million for the nine months ended September 30, 2022 consisted of a net loss of $18.7 million and non-cash adjustments of $3.7 million, consisting primarily of non-cash restructuring and impairment charges of $2.9 million and stock-based compensation and depreciation and amortization of $0.4 million each. In addition, we experienced changes in operating assets and liabilities of $4.5 million.

Net cash used in operating activities of $21.9 million for the nine months ended September 30, 2021 consisted of a net loss of $16.8 million and non-cash adjustments of $2.8 million, consisting of gains on the sale of the Dermatology Business of $3.5 million, extinguishment of promissory note of $2.0 million and sales of property and equipment of $0.5 million, partially offset by stock-based compensation of $2.0 million and depreciation and amortization of $1.3 million. In addition, we experienced changes in operating assets and liabilities of $2.4 million.

Net Cash Provided by Investing Activities

We had no cash flows related to investing activities for the nine months ended September 30, 2022. Net cash provided by investing activities of $3.8 million for the nine months ended September 30, 2021 consisted primarily of proceeds from the sale of the Dermatology Business.

Net Cash Provided by Financing Activities

Net cash provided by financing activities of $18.2 million for the nine months ended September 30, 2022 consisted of net proceeds of $13.6 million from the February 2022 public offering and September 2022 ATM financing and $5.7 million from the exercises of Series A warrants in conjunction with the July 2022 Warrant Repricing. In addition, we paid $1.1 million in offering costs related to the financing activities.

Net cash provided by financing activities of $14.8 million for the nine months ended September 30, 2021 primarily consisted of net proceeds from our ATM financing.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial position and results of operations is based on our interim unaudited condensed financial statements included elsewhere in this Quarterly Report, which have been prepared in accordance with accounting principles generally accepted in the U.S., or GAAP. We believe certain of our accounting policies are critical to understanding our financial position and results of operations. There have been no significant changes to our critical accounting judgments, policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission, or SEC, on March 24, 2022, and as amended on July 13, 2022, other than the change in the estimated useful life of our lasers which was changed to eight years effective January 1, 2022, as more fully described in Note 2. Summary of Significant Accounting Policies in our December 31, 2021 financial statements included in our Annual Report.

The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on 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. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.