Note 8 - Royalties Payable

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Royalties Payable [Text Block]

Note 8. Royalties Payable

LockeT Royalty

On January 9, 2023, prior to the consummation of the Merger, Old Catheter entered in an agreement with its Convertible Promissory Noteholders (“Noteholders”), which substantially consisted of amounts due to David A. Jenkins, previously Old Catheter's Chairman of the Board of Directors prior to the Merger, and, currently, the Company’s Executive Chairman of the Board of Directors and Chief Executive Officer, to forgive all accrued interest and future interest expense in exchange for a future royalty right. Under these agreements, the Company is obligated to pay the Noteholders a total royalty equal to 11.82% of net sales of its LockeT device on a quarterly basis, commencing upon the first commercial sale, which occurred in April 2024, through December 31, 2035.  As of   March 31, 2025 and December 31, 2024, the fair value of the royalty payable related to the agreement with the Noteholders was $10.4 million and $9.2 million, respectively. The Company recorded losses for the change in the fair value of the royalty payable of $1.2 million and $0.1 million for the three months ended March 31, 2025 and March 31, 2024, respectively.

An additional royalty will be paid to the inventor of the LockeT device as detailed in the Royalty Agreement. In exchange for the assignment and all rights to LockeT, the Company will pay a 5% royalty on net sales up to $1.0 million in royalties, payable annually in arrears, starting with the year ending December 31, 2022. After $1.0 million has been paid, and if, and only if, a US patent is granted by the United States Patent and Trademark Office, the Company will continue to pay a royalty at a rate of 2% of net sales, until total cumulative royalties of $10.0 million have been paid. The royalty payments will apply to revenues through December 31, 2033, then will terminate regardless of whether the full $10.0 million has been paid.

The Company recorded its first sales of LockeT devices during the year ended December 31, 2024. The Company owed $21 thousand and $32 thousand in connection with the royalty agreements as of March 31, 2025, and December 31, 2024, respectively. 

AMIGO System Royalty

During 2006 and 2007, Old Catheter entered into two investment grant agreements with a non-profit foundation for the purpose of funding the initial development of Old Catheter's AMIGO System, receiving a total of $1.6 million from the foundation. The agreement calls for the payment of the following sales-based royalties by Old Catheter to the foundation upon successful commercialization of the AMIGO System (in thousands, except for percentages):

	Until Royalty Payment
Royalty Percentage	Reaches a Total of
4%	$	1,589
2%	$	3,179
1%	In perpetuity

The Company is not actively marketing and selling the AMIGO System, such that there was no royalty expense recorded for the three months ended March 31, 2025 and 2024 in relation to the AMIGO System. The AMIGO System royalty payable is recorded under royalties payable due to related parties in the condensed consolidated balance sheets.