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Royalties Payable | 3 Months Ended
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Mar. 31, 2024
Royalties Payable |
Royalties Payable | Note 10. Royalties Payable LockeT Royalty On January 9, 2023 Old Catheter entered into an agreement with the Noteholders 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 approximately 12% of net sales of its LockeT device, commencing upon the first commercial sale, through December 31, 2035. An additional royalty will be paid to the inventor of the LockeT device. 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 February 29, 2032, then will terminate regardless of whether the full $10.0 million has been paid. 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:
Royalty Percentage |  |  | Until Royalty Payment Reaches a Total of |
4% |  |  | $ | 1,589,500 |
2% |  |  | $ | 3,179,000 |
1% |  |  | In perpetuity |
The Company is not actively marketing and selling the AMIGO System. There was no royalty expense recorded for the three months ended March 31, 2024 and 2023 in relation to the AMIGO System. The AMIGO System royalty has been earned and payment has been deferred to a future date. The table below represents the change in fair value of level 3 royalties payable for the three months ended March 31, 2024 and 2023 ($ in thousands). See Note 2, Summary of Significant Accounting Policies, for valuation techniques.
|  | 2024 |  |  | 2023 |
Beginning Balance, January 1, |  | $ | 6,974 |  |  | $ | — |
AMIGO royalty payable recognized in connection with the Merger |  |  | — |  |  |  | 160 |
LockeT royalty payable recognized in connection with the Merger |  |  | — |  |  |  | 7,432 |
Accretion of LockeT royalty payable |  |  | — |  |  |  | 513 |
Change in fair value of royalties payable |  |  | 86 |  |  |  | — |
Ending Balance, March 31, |  | $ | 7,060 |  |  | $ | 8,105 |

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