Item 1A. Risk Factors
Item 1A. Risk Factors
In connection with the matters discussed in this Amended 10-Q, the Company has updated and supplemented certain of the risk factors previously disclosed in Part 1, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and has added additional risk factors, as set forth below. The risk factors below should be read together with the risk factors previously disclosed in such Annual Report on Form 10-K.
The Company has incurred debt and may need or desire to incur additional debt to finance its operations. If the Company is unable to utilize its existing debt facilities, or secure additional credit in the future by extending the terms of its current credit agreements or obtaining other debt financing from another lender, its operations and profits will be negatively impacted.
The Company’s business is capital intensive. On April 9, 2021, the Company and certain of its domestic subsidiaries entered into a five-year, $22,000,000 Credit Agreement with Fifth Third, which refinanced its existing domestic Gamma Knife portfolio. 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 (together with the Credit Agreement, the “Credit Agreements”) in connection with the acquisition of GKCE. 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.
The Company’s combined long-term debt, net, totaled $18,184,000 and $20,182,000 as of September 30, 2025 and December 31, 2024, respectively. The Credit Agreement is secured by a lien on substantially all of the assets of the Company and certain of its domestic subsidiaries, and the DFC Loan is secured by a lien on GKCE’s assets. The Credit Agreement includes a $7,000,000 Revolving Line available for future projects and general corporate purposes. 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. The Company’s current level of debt may adversely affect the Company’s ability to secure additional credit in the future and, as a result, may affect operations and profitability.
To secure additional credit, the Company may seek to enter into an extension of the Credit Agreements or to enter into a new facility with another lender. However, the Company may not be able to extend the terms of its Credit Agreements or to obtain other debt financing on terms that are favorable to the Company, if at all. 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.
The Company’s operations and profitability may also be materially adversely affected in the event of a default under the Credit Agreements, which could result in the Company’s creditors accelerating the defaulted loan, seizing the Company’s assets with respect to which a default has occurred, and applying any collateral they may have at the time to cure the default. For a discussion of the potential adverse effects of an event of default under the Credit Agreements, see the risk factors below titled “ Upon a default under the Credit Agreements, the Company may be subject to suspended borrowing abilities, accelerated payment obligations with respect to outstanding indebtedness, and other adverse consequences that would negatively affect the Company ’ s business, operations, and financial condition ” and “ The Company ’ s liquidity position and the potential acceleration of payment obligations under the Credit Agreements raise substantial doubt about the Company ’ s ability to continue as a going concern. ”
The Company ’ s debt agreements contain restrictions that limit its flexibility in operating its business, which could have an adverse effect on its business and operations.
The Credit Agreement and the DFC Loan contain various restrictive covenants that limit the Company’s ability to engage in specified types of transactions. 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. Any new facility or loan agreement that the Company enters into in the future could subject the Company to additional restrictions on its business operations. These restrictions limit the Company’s flexibility in operating its business.
Upon an event of default under the Credit Agreements, the Company may be unable to utilize certain of its debt facilities, payment obligations may be accelerated, and the Company could be subject to other adverse consequences that would negatively affect the Company ’ s business, operations, and financial condition.
The Company is obligated to comply with certain financial-reporting requirements, financial ratios, and liquidity and leverage thresholds under certain covenants in the Credit Agreements. The Company’s ability to meet those affirmative covenants on an on-going basis can be affected by events beyond our control, including prevailing economic, financial market, and industry conditions, and the Company cannot give assurance that it will be able to satisfy such ratios and tests when required. A breach of any of these covenants could result in a default under the Credit Agreements. In December 2025 the Company was notified of an asserted default of a cash-maintenance covenant under the Credit Agreement with Fifth Third, as discussed in more detail below.
Upon the occurrence of an event of default, the lenders could elect to declare the amounts outstanding under the Credit Agreements immediately due and payable and take actions to enforce their security interest in certain Company assets such as seeking to take possession of, and to dispose of, the collateral securing the credit facilities and loans. The Company’s business, financial condition, and results of operations could be materially adversely affected as a result of any of those events. Each of these adverse consequences remains a possibility due to the defaults under the Credit Agreements described below.
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. On March 3, 2025, the Company received an additional waiver from DFC 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 (including due to the asserted event of default described below resulting from non-compliance with the Credit Agreement), 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.
On December 10, 2025, the Company received notice from Fifth Third asserting that an event of default had occurred under the Credit Agreement due to a failure to satisfy a covenant requiring the maintenance of minimum unrestricted domestic cash and Cash Equivalents (as defined in the Credit Agreement) of at least an aggregate of $5,000,000 for the fiscal quarter ended September 30, 2025, and not due to a payment default (such default, the “Specified Event of Default”). As a result of the Specified Event of Default, the notice informed the loan parties to the Credit Agreement that Fifth Third had effectively suspended the borrowers’ ability to borrow additional amounts under the Revolving Line of the Credit Agreement.
The Company determined that the Specified Event of Default under the Credit Agreement could be deemed to have resulted in an event of default under the DFC Loan. Although, as of January 16, 2026, the Company is currently in discussions with Fifth Third regarding a waiver and an amendment to the Credit Agreement, there can be no assurances regarding the outcome of such discussions. Similarly, if an event of default occurred under the DFC Loan due to non-compliance under the Credit Agreement, there can be no assurance that DFC will be willing to provide a waiver. Despite the Company’s efforts to obtain waivers, DFC and Fifth Third could instead exercise their rights to accelerate the repayment of outstanding indebtedness under the Credit Agreements, among other remedies that would adversely affect the Company’s business, operations, and financial condition.
As of January 16, 2026, neither Fifth Third nor DFC has accelerated the obligations of the borrowers under the Credit Agreements or any related loan documents. However, unless and until the Company successfully negotiates a waiver or an agreement to amend, refinance, or replace the Credit Agreements, the possibility remains that Fifth Third and/or DFC will accelerate all payment obligations under the Credit Agreements and exercise the other adverse remedies available to them upon an event of default, including seizing the Company’s assets with respect to which a default has occurred and applying any collateral available at the time to cure the default.
If Fifth Third or DFC were to accelerate all payment obligations under the Credit Agreements, the Company would not have sufficient cash on hand to satisfy such accelerated payment obligations, which raises substantial doubt about the Company’s ability to continue as a going concern. See the risk factor below titled “ The Company ’ s liquidity position and the potential acceleration of payment obligations under the Credit Agreements raise substantial doubt about the Company ’ s ability to continue as a going concern. ”
The Company ’ s liquidity position and the potential acceleration of payment obligations under the Credit Agreements raise substantial doubt about the Company ’ s ability to continue as a going concern.
Due to the Specified Event of Default under the Credit Agreement and any resulting event of default that may be deemed to have occurred under the DFC Loan, the lenders could seek to accelerate the Company’s payment obligations under the Credit Agreements. Although, as of January 16, 2026, neither Fifth Third nor DFC has accelerated payment obligations under the Credit Agreements, there can be no assurance that they will not do so. If the Company’s payment obligations under the Credit Agreements are accelerated due to the event of default, the Company would likely not have sufficient cash on hand, cash flow from operations, and other cash resources to immediately satisfy the obligations. As long as the Company remains in default under the Credit Agreements, and unless and until the Company successfully negotiates a waiver or an agreement to amend, refinance, or replace the Credit Agreements, the conditions described above raise substantial doubt about the Company’s ability to continue as a going concern. .
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.