v3.26.1
Notes Payable
 3 Months Ended
Mar. 31, 2026
Notes Payable [Abstract]  
NOTES PAYABLE

6. NOTES PAYABLE

 

The Company entered into the Avenue Financing and financing arrangements for a portion of its Directors and Officers (“D&O”) insurance premiums, as follows (in thousands):

 

           Principal Repayments   Outstanding Balance 
   Amount       Three Months Ended
March 31,		   March 31   December 31, 
   Financed   Interest Rate   2026   2025   2026   2025 
Avenue Capital Note Principal and Final Payment Fee  $8,500    Prime + 5.25%  $
-
   $
-
   $9,250   $9,250 
Yorkville Convertible Notes, at fair value   11,500    0.0%   
-
    2,365    
-
    
-
 
2025 Insurance Note   580    8.0%   157    
-
    269    426 
2024 Insurance Note   596    8.4%   
-
    178    
-
    
-
 
             $157   $2,543   $9,519   $9,676 
Less: current portion of notes payable                       (3,912)   (2,854)
Unamortized debt discounts and debt issuance costs                       (1,105)   (1,284)
Notes payable. long term                      $4,502   $5,538 

 

Avenue Capital Financing

 

On March 24, 2025, the Company completed the Avenue Financing, with an initial draw-down of $8.5 million.

 

The term of the Avenue Financing is for three years, with an interest-only payment period of no less than 15 months, which can be extended to 24 months upon achieving the milestones for the second financing tranche. The second financing tranche, which includes an additional $6.5 million in debt financing from Avenue Capital Group is contingent upon; (i) FDA clearance of the DeepView System and (ii) the Company completing a $7.0 million equity raise. The borrowings under the Avenue Financing accrue interest at a variable amount per annum equal to the greater of (i) the sum of (A) the Prime Rate plus (B) 5.25%, and (ii) 12.75%, and they mature on March 1, 2028 (the “Maturity Date”). In addition, on the Maturity Date a final payment of $0.8 million is due to Avenue Capital Group and is accrued as debt as of March 31, 2026.

 

Up to $2.0 million of the borrowings under the Avenue Financing are convertible at the lender’s option, into a number of shares of common stock at a price per share equal to 120% of the exercise price of the Avenue Warrants discussed below. Pursuant to the guidance in ASC 815-40, Contracts in Entity’s Own Equity, the Company evaluated whether the conversion feature needed to be bifurcated from the host instrument as a freestanding financial instrument. Under ASC 815-40, to qualify for equity classification (or non-bifurcation, if embedded) the instrument (or embedded feature) must be both (1) indexed to the issuer’s own stock and (2) meet the requirements of the equity classification guidance. Based upon the Company’s analysis, it was determined the conversion option is indexed to its own stock and also met all the criteria for equity classification. Accordingly, the conversion option is not required to be bifurcated from the host instrument as a derivative.

 

As part of the Avenue Financing the Company issued 768,072 warrants to Avenue Capital Group which was equal to 8.5% of the total funding commitment. The Avenue Warrants have an exercise price equal $1.66 per share, see Note 3. 

 

Repayment of Yorkville Convertible Notes

 

During the first quarter of 2025, the Company paid the remaining $2.4 million of the Yorkville Convertible Notes of which $1.2 million was settled in cash and $1.2 million was settled in shares of common stock.

 

Insurance Notes

 

The Company determined that the carrying amounts of all of the insurance notes approximate fair value due to the short-term nature of borrowings and current market rates of interest.