v3.26.1
Debt
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
Debt

Note 5 – Debt

 

Note Payable – Related Party and Warrants Issued as Debt Discount

 

Note #2

 

In April 2023, the Company executed a one (1) year note with a shareholder and board director for $500,000. The note bears interest at 8% with a default interest rate of 20%. The note is secured by the net proceeds from the Company’s PET imaging devices and service contracts.

 

The note principal was due 50% at December 31, 2023 and the remaining 50% plus any accrued unpaid interest at March 31, 2024.

 

In March 2024, the Company and the lender agreed to extend the due date of the remaining note balance of $250,000 for an additional six-months (6) to September 2024. During 2024, $100,000 had been repaid.

 

In September 2024, the Company and the lender agreed to extend the due date of the remaining note balance of $150,000 for an additional six-months (6) to March 2025.

 

The remaining $150,000 of the note was repaid in 2025. In connection with the repayment, $41,414 of accrued interest was forgiven. Because the transaction occurred with a related party (a significant stockholder and board member), the Company accounted for the forgiveness as a capital contribution, recording the amount as an increase to additional paid-in capital rather than recognizing a gain.

F-36

 

 

This treatment is consistent with FASB ASC 470-50-40-2 which contemplates the treatment of extinguishment transactions between related entities as capital transactions, and with FASB ASC 850-10-50-5, which requires related-party transactions to be presented and disclosed according to their substance rather than as arm’s-length transactions.

 

Evaluation of Debt Modification vs. Extinguishment

 

Under FASB ASC 470-50-40, a modification or exchange of debt instruments must be evaluated to determine if it should be accounted for as a debt extinguishment or as a modification of the existing debt. The Company performed the following assessments:

 

1. Evaluation of Substantive Changes in Terms

 

A debt modification or exchange is considered a substantive change and is accounted for as an extinguishment if:

 

●A conversion feature that was substantive at the modification date is added or eliminated.

●The terms of the new debt are substantially different from the original debt, determined by applying the 10% cash flow test.

 

The Company evaluated the debt extensions and determined that:

 

●The extensions did not add or eliminate a conversion option that was substantive at the modification date.

●The present value of the modified debt's cash flows did not differ by 10% or more from the remaining cash flows under the original instrument.

●There was no significant change in interest rate, collateral, or repayment terms beyond the extensions.

 

Since these factors did not meet the criteria for substantive modification, the Company concluded that no debt extinguishment occurred for the 2025 and 2024 modifications. Accordingly, there was no calculation of gain or loss.

 

Warrants Issued with Debt

 

In connection with the issuance of the $500,000 note in 2023, the Company also issued 100,000 warrants to the lender, which had a fair value of $126,699, and was recorded as a debt discount in 2023, to be amortized over the life of the note. These warrants vested immediately on the grant date and expired on December 31, 2025. The warrants are exercisable at $0.10/share.

 

On December 31, 2025, the warrants were extended to a new maturity date of December 31, 2026, and there was no financial statement impact.

 

See Note 9.

 

Year Ended December 31, 2024

 

Note #3

 

In August 2024, the Company executed a four-month (4) note with a shareholder and board director for $100,000. The note bears interest at 0% with a default interest rate of 20%. The note was secured by the net proceeds from the Company’s PET imaging devices and service contracts.

 

For the year ended December 31, 2024, the Company recorded imputed interest expense (8%) on this note of $1,600 and increased additional paid-in capital.

 

This note was repaid in full in March 2025.

 

Year Ended December 31, 2025

 

Note #4

 

In February 2025, the Company executed a note with a shareholder and board director for $100,000. The note was non-interest bearing and unsecured. The note was required to be repaid within one-month. The $100,000 advance was repaid in full during 2025. For the year ended December 31, 2025, the Company recorded imputed interest expense (8%) on this note of $1,337 and increased additional paid-in capital.

 

The following is a summary of the notes payable – related party for the period ended December 31, 2025 and 2024:

         
 Terms     Note Payable #1 
 Related Party 		    Note Payable #2 
 Related Party 		    Note Payable #3 
 Related Party 		    Note Payable #4 
 Related Party 
                 
Issuance dates of notes   August 2022   April 2023   August 2024   February 2025
Maturity date   June 2026   March 2025   December 2024   March 2025
Interest rate   10%   8%   0%   0%
Imputed interest rate   N/A   N/A   8%   8%
Default interest rate   20%   20%   20%   None
Collateral*   PET-CT Imaging Device   PET-CT Imaging Device   PET-CT Imaging Device   Unsecured

 

                   Total 
Balance - December 31, 2023   1,200,000    218,325    -    -    1,418,325 
Proceeds from issuance of note   -    -    100,000    -    100,000 
Repayments   -    (100,000)   -    -    (100,000)
Amortization of debt discount   -    31,675    -    -    31,675 
Balance - December 31, 2024   1,200,000    150,000    100,000    -    1,450,000 
Proceeds from issuance of note   -    -    -    100,000    100,000 
Repayments   -    (150,000)   (100,000)   (100,000)   (350,000)
Balance - December 31, 2025  $1,200,000   $-   $-   $-   $1,200,000 

  

The debt holder for each of these notes is a member of the Board of Directors

  

In March 2025, Note #1 was extended to December 31, 2025.

 

On February 16, 2026, Note #1 was extended to June 30, 2026.

 

These extensions did not meet the criteria for substantive modification, the Company concluded that no debt extinguishment occurred for these 2025 modifications. Accordingly, there was no calculation of gain or loss.

 

*Collateralized Equipment - Installment Sale

 

The Company's Note #1, which represents the only debt outstanding with a material lender at December 31, 2025, is secured by the Company's sole imaging device carried in inventory. The lender has authorized the sale of the collateral asset. The loan agreement requires the sale proceeds to be applied toward the outstanding loan balance.

 

Subsequent to December 31, 2025, the Company utilized working capital to repay $325,000 on Note #1.

  

Notes Payable

 

Year ended December 31, 2024

 

In September 2024, the Company executed a three-month (3) note with a shareholder for working capital of $300,000. The note had a stated interest rate of 0% with a default interest rate of 20%. The Company imputed interest at 8%. The note was secured by the net proceeds from the Company’s PET imaging devices and service contracts.

 

The following is a summary of notes payable for the year ended December 31, 2024:

 

Terms  Note Payable #1 
     
Issuance date of note   September 2024 
Maturity date   December 2024 
Interest rate (imputed)   8%
Default interest rate   20%
Collateral   PET-CT Imaging Device 
      
Balance - December 31, 2023   - 
Proceeds from issuance of note   300,000 
Conversion to common stock   (300,000)
Balance - December 31, 2024  $- 

 

For the year ended December 31, 2024, the Company recorded imputed interest expense on this note of $3,814 and increased additional paid-in capital.

 

This $300,000 was converted into 375,000 shares of common stock in November 2024.

 

See Note 7.