What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-04-04 compared with 2024-04-01 · 88 added, 38 removed, 114 unchanged (53% of the section changed)

In addition to the other information in this report, the following factors could affect our future business, results of operations, cash flows or financial position, and could cause future results to differ materially from those expressed in any of the forward-looking statements contained in this report.

The risks and uncertainties described below are not the only ones we face.

Additional risks not currently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business operations.

Company, Industry and Economic Risk

2 unchanged sentences

Currently, there is a limited market for Gamma Knife equipment and PBRT systems.

As a result, we plan to adapt our business model to place other types of stereotactic radiosurgery and advanced radiation therapy equipment in addition to Gamma Knife units and PBRT systems.

As a result, we plan to adapt our business model to place other types of stereotactic radiosurgery and advanced radiation therapy equipment, including through the completion of the RI Acquisition, in addition to Gamma Knife units and PBRT systems.

This will constitute an expanded product mix for the Company and there can be no assurance that we can successfully adapt our historical business model to these new product offerings.

14 unchanged sentences

Additionally, the Company is obligated to remove the equipment at the end of the lease term.

In the event the customer does not purchase the equipment from the Company or the Company is not able to trade in the equipment, the Company is required to remove the equipment and record an ARO.

In the event the customer does not purchase the equipment from the Company or the Company is not able to trade in the equipment, the Company is required to remove the equipment and record an Asset Retirement Obligation (“ARO”).

The market for the Gamma Knife is limited and the Company may not be able to place additional Gamma Knife units which could negatively impact the Company's revenue and financial results.

9 unchanged sentences

The lease financing previously obtained by Orlando was also refinanced as long-term debt by the Credit Agreement.

On January 25, 2024, the Company and Fifth Third entered into the First Amendment which added an additional $2,700,000 term loan.

On January 25, 2024, the Company and Fifth Third entered into the First Amendment which added an additional $2,700,000 term loan, and, on December 18, 2024 the Company entered into the Second Amendment which added another $7,000,000 term loan.

In June 2020, the Company’s wholly-owned subsidiary, HoldCo, entered into the DFC Loan in connection with the acquisition of GKCE.

The first tranche of the DFC Loan was funded in June 2020.

The first tranche of the DFC Loan was funded in June 2020 in the amount of $1,425,000.

In October 2023, the second tranche of the DFC Loan was funded in the amount of $1,750,000 to finance its equipment upgrade in Ecuador.

2 unchanged sentences

The Credit Agreement includes a $7,000,000 Revolving Line available for future projects and general corporate purposes.

The Company borrowed $2,500,000 on the Revolving Line as of December 31, 2023, which was paid off in January 2024.

Depending on the Company’s financing requirements and market conditions, the Company may seek to finance its operations by incurring additional long-term debt in the future.

4 unchanged sentences

These covenants subject the Company to various restrictions that limit the Company from, among other activities, creating any unpermitted liens to exist on its assets, incurring additional indebtedness, causing a sale of all or substantially all of its assets, effecting a merger, paying dividends or other distributions on capital stock, redeeming shares of capital stock, engaging in transactions with affiliates, or undertaking lease obligations above certain thresholds.

Moreover, under certain of our credit arrangements we have granted the lender a security interest in Company assets as security for our obligations.

In addition, the Company is obligated to comply with certain financial-reporting requirements, financial ratios, and liquidity and leverage thresholds under certain covenants in its Credit Agreement and DFC Loan.

7 unchanged sentences

If the Company is unable to obtain adequate financing or financing on satisfactory terms when required, the Company’s ability to support its business growth and to respond to business challenges could be significantly impaired, and its business may be harmed.

As of December 31, 2023, HoldCo was not in compliance with all of its debt covenants then in effect pursuant to the DFC Loan.

As of December 31, 2023 and 2024, HoldCo was not in compliance with all of its debt covenants then in effect pursuant to the DFC Loan.

However, on March 28, 2024, the Company obtained a waiver for the covenant non-compliance as of December 31, 2023 (the “DFC Waiver”).

The Company expects to be compliant with all of its debt covenants by the end of the fiscal quarter ended March 31, 2024.

However, if a waiver from DFC is required in the future for potential non-compliance, DFC may be unwilling to provide a waiver and could, as a result, among other remedies, accelerate the repayment of the debt obligations oustanding under the DFC Loan, which could have a material adverse effect on the Company’s financial condition.

The Company may fail to successfully integrate the interests to be acquired in the RI Acquisition with its existing business in a timely manner, which could have a material adverse effect on the Company ’ s business, financial condition, results of operations, or cash flows, or the Company may fail to realize all of the expected benefits of the RI Acquisition, which could negatively impact the Company ’ s future results of operations.

The integration of any acquisitions, including the Company’s planned RI Acquisition, requires significant time and resources.

A failure by the Company to successfully integrate the businesses, operations, and contractual obligations of the RI Target Companies with the Company’s existing business in a timely manner could have a material adverse effect on the Company’s business, financial condition, cash flows, or results of operations.

Acquiring majority interests in the RI Target Companies, assuming obligations under the commercial payor contracts set forth in the IPA, and integrating the businesses of the three turn-key radiation therapy cancer centers that the RI Target Companies operate in Rhode Island involves several risks that could undermine the success and expected benefits of the RI Acquisition.

On March 3, 2025 the Company received an additional DFC waiver for certain covenants as of December 31, 2024 and through December 31, 2025.

However, if a waiver from DFC is required in the future for potential non-compliance, DFC may be unwilling to provide a waiver and could, as a result, among other remedies, accelerate the repayment of the debt obligations outstanding under the DFC Loan, which could have a material adverse effect on the Company’s financial condition.

The Company ’ s failure to file certain financial statements in connection with the RI Acquisition pursuant to Rules 8-04 and 8-05 of Regulation S-X and Item 9.01 of Form 8-K will limit the Company ’ s ability to raise capital.

On May 7, 2024, the Company filed a Current Report on Form 8-K to report the completion of the Company’s acquisition of 60% of the equity interests in each of the RI Companies from GenesisCare.

Based on information available to the Company, the Company believes that the acquisition would qualify as a “significant” acquisition under Rule 1-02(w) of Regulation S-X and as a result, under Rules 8-04 and 8-05 of Regulation S-X, the Company would be required to provide (i) audited financial statements for the RI Companies as of and for the period ended June 30, 2023 and unaudited interim financial statements to the extent applicable (the “8-04 financial information”), and (ii) pro forma historical financial information combined to reflect the RI Companies’ financial information for the most recent fiscal year and interim period (the “8-05 financial information” and, together with the 8-04 financial information, the “S-X financial information”).

The Company purchased its interest in the RI Companies as part of the sale of certain of GenesisCare’s assets in its bankruptcy proceedings which were initiated in early June 2023.

Due to the lack of reliable financial information for the RI Companies following the protracted bankruptcy proceedings, the Company is not able to obtain financial information sufficient to be able to provide the S-X financial information.

The Company, therefore, is not in compliance with Rules 8-04 and 8-05 of Regulation S-X.

Unless the Company files the S-X financial information, the Securities and Exchange Commission will not declare effective registration statements or post-effective amendments filed by the Company until twelve months following the date on which the Company has filed a periodic report with the Securities and Exchange Commission that meets the requirements of Regulation S-X, and affiliates will be not be permitted to make sales of securities pursuant to Rule 144 pursuant to the Securities Act of 1933, as amended.

The Company may fail to successfully integrate the interests acquired in the RI Acquisition with its legacy business in a timely manner, which could have a material adverse effect on the Company ’ s business, financial condition, results of operations, or cash flows, or the Company may fail to realize all of the expected benefits of the RI Acquisition, which could negatively impact the Company ’ s future results of operations.

The integration of any acquisitions, including the RI Acquisition, completed during the 2024 fiscal year, requires significant time and resources.

A failure by the Company to successfully integrate the businesses, operations, and contractual obligations of the RI Companies with the Company’s existing business in a timely manner could have a material adverse effect on the Company’s business, financial condition, cash flows, or results of operations.

Acquiring a majority interest in the RI Companies, assuming obligations under the commercial payor contracts set forth in the IPA, and integrating the businesses of the three turn-key radiation therapy cancer centers that the RI Companies operate in Rhode Island has involved and likely will continue to involve several risks that could undermine the success and expected benefits of the RI Acquisition.

Such risks include but are not limited to the following:

the potential difficulty of assimilating the businesses and operations of the RI Target Companies with our existing business and operations;

the added costs that could be incurred from coordinating the integration of personnel from diverse business backgrounds and consolidating the corporate and administrative functions of the Company and the RI Target Companies;

the potential disruption to our existing operations that could result from the Company expanding into another state and expending time and resources to oversee the RI Target Companies’ operation of their three radiation oncology centers;

the added costs and burdens that the Company will incur in connection with obtaining the governmental and regulatory approvals that are necessary to effect the RI Acquisition and to stay regulatorily compliant under Rhode Island law if the RI Acquisition is effected;

the diversion of the resources of the Company and the attention of the Company’s management from the Company’s existing operations and business ventures to the operations of the RI Target Companies, which could hinder the performance of the Company and its subsidiaries;

the potential management differences that could result from the Company gaining majority interests in the RI Target Companies and taking control from GenesisCare;

the risk of financial loss due to the existing debts and liabilities of the RI Target Companies and the potential need for the Company to expend substantial capital to stabilize the businesses of the RI Target Companies due to any instability created by the GenesisCare bankruptcy, with no guarantee of return on investment.

the potential difficulty of assimilating the businesses and operations of the RI Companies with our existing business and operations;

the potential disruption to our existing operations that could result from the Company expanding into another state and expending time and resources to oversee the RI Companies’ operation of their three radiation oncology centers;

the added costs and burdens that the Company has and will incur in connection with obtaining and then maintaining the governmental and regulatory approvals that were necessary to effect the RI Acquisition and to stay regulatorily compliant under Rhode Island law on an on-going basis;

the diversion of the resources of the Company and the attention of the Company’s management from the Company’s existing operations and business ventures to the operations of the RI Companies, which could hinder the performance of the Company and its subsidiaries;

the potential management differences that could result from the Company gaining majority interests in the RI Companies and taking control from GenesisCare;

the risk of financial loss due to the existing debts and liabilities of the RI Companies and the potential need for the Company to expend substantial capital to stabilize the businesses of the RI Companies due to any instability created by the GenesisCare bankruptcy, with no guarantee of return on investment.

If the Company is not successful in addressing these risks effectively, the Company’s business and operations could be impaired.

The Company ’ s failure to remediate its material weakness in its internal control over financial reporting could adversely affect its ability to report its financial condition and results of operations in a timely and accurate manner, and may adversely affect investor confidence, our reputation, and our business operations and financial condition.

The Company is subject to various SEC reporting and other regulatory requirements.

Effective internal controls over financial reporting are necessary for the Company to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud and material errors in transactions and to fairly present financial statements.

Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations.

As of December 31, 2024, the Company’s principal executive officer and principal financial officer carried out an evaluation of the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Rules 13a-15(e) and 15d-15(e)) of the Exchange Act) and concluded that the disclosure controls and procedures were not effective due to a material weakness in the Company’s internal control over financial reporting.

The Company has limited accounting and finance personnel and expanded its operations in 2024, which impacted the Company’s ability to maintain an effective control environment.

While the Company has processes to identify and appropriately apply applicable accounting requirements, the Company plans to continue to enhance its systems, processes, and human capital resources with respect to its accounting and finance functions.

The elements of the Company’s remediation plan can only be accomplished over time with the addition of experienced accounting and finance employees and, where necessary, external consultants, and with the implementation of enhanced accounting systems and financial close processes.

The Company has commenced remediation of the above discussed material weakness as it has expanded its accounting staff and personnel since late in fiscal 2024.

The Company will continue to evaluate its accounting and finance staffing needs as well as make planned enhancements to its systems and improvements to its financial reporting processes.

However, there can be no assurance that the Company will be successful in remediating the material weakness in its internal control over financial reporting.

If the Company is unable to successfully complete its remediation efforts or favorably assess the effectiveness of its internal control over financial reporting, the Company’s operating results, financial position, stock price, and ability to accurately report its financial results and timely file its SEC reports could be adversely affected.

Additionally, any failure to maintain effective controls could limit the Company’s ability to prevent or detect a misstatement of our accounts or disclosures that could result in material misstatements of the Company’s annual or interim financial statements.

In such a case, the Company may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to the listing requirements of the NYSE American.

In addition, the Company could be subject to sanctions or investigations by the SEC, the NYSE American, or other regulatory authorities as well as shareholder litigation which would require additional financial and management resources.

Failures in internal controls may also negatively affect investor and customer confidence in Company management or result in adverse publicity and concerns from investors and customers, any of which could have a negative effect on the price of the Company’s common stock, subject the Company to regulatory investigations, potential penalties, or stockholder litigation, and have a material adverse impact on the Company’s business and financial condition.

The Company ’ s cash flow could become insufficient to service its debt due to financial, business, and other factors.

8 unchanged sentences

A limited number of customers have historically accounted for a substantial portion of the Company’s total revenue, and the Company expects such customer concentration to continue for the foreseeable future.

For example, in 2023, one customer in total accounted for approximately 48% of the Company’s revenue .

For example, in 2024, two customers individually accounted for approximately 35% and 27% of the Company’s revenue .

The loss of a significant customer or a significant decline in the business from the Company’s largest customers could have a material adverse effect on the Company’s business and results of operations.

18 unchanged sentences

International operations make the Company vulnerable to risks associated with doing business in foreign countries that can affect its business, financial condition, results of operations and cash flows.

The Company installed a Gamma Knife unit in Lima, Peru in 2017 and acquired a Gamma Knife unit operation in Guayaquil, Ecuador in 2020.

The Company’s third international site in Puebla, Mexico is expected to begin treating patients in June 2024.

The Company installed a Gamma Knife unit in Lima, Peru in 2017, acquired a Gamma Knife unit operation in Guayaquil, Ecuador in 2020, and installed a LINAC in Puebla, Mexico which began treating patients in July 2024.

International operations can be subject to exchange rate volatility, which could have an adverse effect on our financial results and cash flows.

In addition, international operations can be subject to legal and regulatory uncertainty and political and economic instability, which could result in problems asserting property or contractual rights, potential tariffs, increased compliance costs, increased regulatory scrutiny, foreign customers with longer payment cycles than customers in the United States, potential adverse tax consequences, the inability to repatriate funds to the United States, and the Company’s inability to operate in those locations.

There can be no assurance that the Company ’ s pending RI Acquisition will close as anticipated, as the closing of the transactions provided for in the IPA are subject to various judicial, regulatory, and contractual contingencies over which the Company has little to no control

The closing of the pending RI Acquisition is contingent upon certain closing conditions, including GenesisCare and the Company entering into a consent agreement with the Rhode Island Department of Health and approval of all equity holders and managers of each RI Target Company.

There can be no assurance that the Company and GenesisCare will receive the necessary approvals and consents to effect the RI Acquisition or that such approvals and consents will be delivered.

Furthermore, if all of the closing conditions to the RI Acquisition are not met by April 30, 2024, both the Company and GenesisCare have the right to terminate the IPA without completing the RI Acquisition.

The Company cannot assure that the pending RI Acquisition will close on our anticipated timeline or at all, or without material adjustment.

Flaws in the Company ’ s ongoing due-diligence assessment in connection with the equity interests and payor contracts to be acquired in the RI Acquisition could have a significant negative effect on the Company ’ s financial condition and results of operations.

The Company conducted due diligence when evaluating the RI Acquisition prior to executing the IPA and continues to complete due diligence during the interim period between signing the IPA and closing the RI Acquisition.

The process of completing due diligence is expensive and time consuming due to the operations, accounting, finance, and legal professionals who must be involved in the due-diligence process and the fact that such efforts do not always lead to a consummated transaction.

Flaws in the Company ’ s due-diligence assessment in connection with the equity interests and payor contracts acquired in the RI Acquisition could have a significant negative effect on the Company ’ s financial condition and results of operations.

The Company conducted due diligence when evaluating the RI Acquisition prior to executing the IPA and during the interim period between signing the IPA and closing the RI Acquisition.

The time and costs of the due-diligence process were amplified with respect to the Company’s evaluation of the potential costs and benefits of the RI Acquisition due to the distressed state and bankruptcy of GenesisCare.

Despite the thoroughness of the Company’s review, diligence may not reveal all material issues that could affect the Company’s interests in the RI Target Companies if the RI Acquisition is consummated.

Despite the thoroughness of the Company’s review, diligence may not have revealed all material issues that could affect the Company’s interests in the RI Companies acquired in the RI Acquisition.

In addition, factors outside of the Company’s control could later arise.

The Company’s failure to identify material issues specific to the business and operations of the RI Target Companies and the liabilities and obligations the Company is assuming upon the assignment of the payor contracts during the Company’s ongoing due-diligence process could negatively impact the Company’s financial condition and results of operations after the closing of the RI Acquisition.

The impact of a pandemic, epidemic, or outbreak of an infection disease, such as COVID-19 and associated economic disruptions, has and may in the future adversely affect the Company ’ s business operations and financial condition.

The magnitude of the continued impact of COVID-19 on our business and operations are largely dependent on external factors and future developments that are beyond our control, such as the extent and duration of any COVID-19 resurgence, the spread of new variants, the occurrence of other severe health events or similar unprecedented outbreaks, the response to any such resurgence, new variant, or outbreak by government and regulatory agencies, such as the potential reinstatement of “shelter-in-place” lockdown orders, the efficacy and implementation of vaccinations and boosters to counter the virus, the availability of Gamma Knife and PBRT treatments, patients’ assessment of the risks of prioritizing rather than delaying such treatments in the event of any COVID-19 resurgence, new variant, or outbreak, the worsening of current economic conditions, and the severity of ongoing supply-chain disruptions.

If there are regressions in our global progress to combat the COVID-19 pandemic or if any similar global public-health events develop, the scope and nature of the impact on our business, results of operations, financial condition, liquidity and cash flows would be uncertain and potentially materially adverse.

The Company’s failure to identify material issues specific to the business and operations of the RI Companies and the liabilities and obligations the Company assumed from the assignment of the payor contracts, during the Company’s due diligence process, could negatively impact the Company’s financial condition and results of operations.

New technology and products could result in making the Company's equipment obsolete which could have a material adverse impact on its business and results of operations.

7 unchanged sentences

Existing model 4(C)s of the Gamma Knife are not upgradeable to the Perfexion model.

As of March 1, 2024, two of the Company’s ten Gamma Knife units in the United States are Esprits and eight of the Company’s ten Gamma Knife units are Perfexion models, two of which have the Icon upgrade.

Currently, four of the Company’s eight Gamma Knife units in the United States are Esprits and all of the Company’s eight Gamma Knife units are Perfexion models, one of which has the Icon upgrade.

The Company’s equipment in Ecuador was upgraded to a Perfexion with Icon in November 2023.

The Company’s equipment in Peru is a Model 4(C).

The Company is in the process of upgrading the equipment in Peru from a Model 4(C) to the Esprit and expects to complete this upgrade during the second quarter of 2025.

The failure to acquire or use new technology and products could have a material adverse effect on our business and results of operations.

8 unchanged sentences

Any necessary response to a cyber-attack, which could include analyzing a security incident, patching up security vulnerabilities, notifying individuals affected by the incident, determining the materiality of the incident, disclosing the incident in accordance with any applicable legal and regulatory requirements, and responding to any resulting litigation, could also divert the Company’s resources and attention from its growth operations and business objectives, which could further hinder its operational and financial performance.

Macroeconomic conditions could have a material adverse effect on our business, results of operations, and financial condition.

Unfavorable macroeconomic conditions, including low productivity growth, declining business investment, inflationary pressures, fluctuating interests rates, concerns regarding the imposition of tariffs (including retaliatory tariffs in response to tariffs imposed by the United States), concerns regarding the level of U.S.

debt, shifts in monetary and fiscal policy, strained international trade relations, and heightened geopolitical pressures, could negatively impact our business, results of operations, and financial condition.

Economic downturns may cause hospitals and medical centers to reduce spending on capital-intensive medical equipment, delay lease renewals for the radiation therapy devices, and decrease overall investment in new treatment technologies.

Trade policies like tariffs and retaliatory measures, as well as geopolitical tensions in the U.S.

and global markets, may cause disruptions to medical equipment supply chains, increase the cost of acquiring advanced radiation therapy technology, and delay the delivery of essential components of our Gamma Knife and LINAC systems.

Economic and inflationary pressure on patients and health care providers, along with prolonged uncertainty in the macroeconomic environment, could result in changes in hospital procurement decisions, reduced demand for elective procedures, and constrained budgets for medical technology investments.

These conditions may also weaken investor confidence in the health care sector, reduce access to capital for expansion projects, reduce access to capital for expansion projects, and increase regulatory scrutiny over health care spending and reimbursement policies, all of which could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to risks associated with foreign operations, including political, economic, and regulatory uncertainties.

We operate Gamma Knife and LINAC facilities in Peru, Ecuador, and Mexico.

These operations expose us to various risks, including changes in foreign regulations, economic instability, and shifts in health care reimbursement policies.

If any of these countries implement stricter health care-related requirements, impose price controls, or experience significant currency fluctuations, our international revenue profitability may be negatively impacted.

The potential impairment of our Gamma Knife portfolio and its salvage value could adversely impact our financial condition and results of operations.

As of December 31, 2024, we determined that our Gamma Knife portfolio had no remaining salvage value, and certain sites experienced equipment impairment or are expected to expire in the second quarter of 2025.

Additionally, two sites that recently recognized their salvage value as part of the Esprit upgrade were subsequently impaired.

Accordingly, we concluded that there was no salvage value remaining and the Company recognized equipment impairment as of December 31, 2024.

The impairment of equipment and change in estimate of salvage value could have a material adverse effect on our financial condition and results of operations.

If additional impairments occur in the future, we may be required to recognize further losses on the write-down of impaired assets and incur additional removal costs for expired Gamma Knife units, which could negatively impact our reported earnings.

Additionally, the continued aging of our equipment portfolio may necessitate increased capital expenditures to replace or upgrade systems, which could increase our financial burden.

Stock Ownership Risk

2 unchanged sentences

Reported average daily trading volume in our common stock for the three-month period ended December 31, 2024 was approximately 21,000 shares.

There is no reason to think that a further increase in an active trading market in the Company’s common stock will develop in the future.

It is not likely that a further increase in an active trading market in the Company’s common stock will develop in the future.

Limited trading volume subjects the Company’s common stock to greater price volatility and may make it difficult for shareholders to sell their shares in a quantity or at a price that is attractive.

Our officers, directors and principal shareholders collectively own a substantial portion of our common stock.

Collectively, our officers and directors beneficially own approximately 23.2% of our outstanding common stock, with Raymond Stachowiak, the Executive Chairman of the Board, beneficially owning approximately 22.8% o f our common stock.

As a result, investors may face challenges in affecting matters involving our Company, including:

the composition of our Board of Directors and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers;

any determinations with respect to mergers or other business combinations;

our acquisition or disposition of assets;

our corporate financing activities.

Our officers, directors, and principal shareholders may act in concert to significantly influence these and other matters requiring shareholder approval.

Furthermore, this concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination that might otherwise be beneficial to our shareholders.

This significant concentration of share ownership may also adversely affect the trading price for our common stock because investors may perceive disadvantages in owning stock in a company in which a small number of shareholders hold a significant ownership interest.

We do not anticipate paying dividends on our common stock.

We do not expect to pay or declare dividends in the foreseeable future.

The declaration of dividends is subject to the discretion of our board of directors and will depend on various factors, including our operating results, financial condition, future prospects, covenants in documents governing our debt obligations and any other factors deemed relevant by our board of directors.

You should not rely on an investment in our company if you require dividend income from your investment in our company.

The success of your investment will likely depend entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable.

There is no guarantee that our common stock will appreciate in value.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors