8-K: Vivos Secures $1.5M Working Capital via Promissory Note

Vivos Therapeutics, Inc. entered into a $2.09 million promissory note agreement with Avondale Capital, securing $1.5 million in net proceeds for working capital.

Summary

• Vivos Therapeutics, Inc. (the Company) entered into a Note Purchase Agreement with Avondale Capital, LLC (Lender) on December 5, 2025.
• The Company issued and sold a Promissory Note (the Note) with an original principal amount of $2,093,340.
• The Principal Amount includes an Original Issue Discount (OID) of $587,340 and $6,000 for the Lender's transaction costs.
• The net proceeds received by the Company from this financing are approximately $1,500,000.
• The Note is unsecured and does not bear interest unless an event of default occurs, in which case interest will accrue at 18% per annum or the maximum legal rate.
• The Company will make weekly payments of $69,778, beginning December 12, 2025, until the Note is paid in full.
• A prepayment discount of $286,140 will be applied if the Note is repaid in full by January 4, 2026.
• The net proceeds are intended for working capital and other general corporate purposes.
• The Company's wholly-owned subsidiary, Airway Integrated Management Company, LLC (AIM), has guaranteed the Company's obligations under the Note.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative. While securing $1.5 million in working capital is a positive for immediate liquidity, the high effective cost of financing (due to the significant OID and transaction fees) and the strict covenants, including a high default interest rate, suggest underlying financial challenges and potentially limited access to more favorable capital. The non-convertible nature is a positive for existing shareholders, but the overall terms reflect a higher risk profile.

Positives

• Secured approximately $1,500,000 in net proceeds, providing crucial working capital for general corporate purposes.
• The Promissory Note is not convertible into shares of Common Stock, avoiding immediate shareholder dilution.
• A significant prepayment discount of $286,140 is available if the Note is repaid in full by January 4, 2026, offering a potential cost reduction.

Negatives

• The effective cost of financing is high, with an Original Issue Discount (OID) of $587,340 and $6,000 in transaction expenses on a $1,500,000 net raise, representing a substantial upfront cost.
• The Note is unsecured, although it is guaranteed by the Company's wholly-owned subsidiary, Airway Integrated Management Company, LLC (AIM).
• Strict covenants are imposed, including timely SEC filings, maintaining NASDAQ listing, and restrictions on incurring new debt without the Lender's prior written consent.
• A high default interest rate of 18% per annum will apply if an Event of Default occurs, significantly increasing the cost of debt under adverse conditions.
• The Note includes customary events of default, including non-payment, incorrect representations, failure to perform covenants, and fundamental transactions without Lender consent, which could lead to immediate acceleration of the outstanding balance.

Risks

• Failure to comply with covenants, such as timely SEC filings or maintaining the NASDAQ listing, could trigger an Event of Default.
• The high default interest rate of 18% per annum could rapidly escalate the Company's debt burden if an Event of Default occurs.
• Restrictions on incurring new debt without Lender's consent could limit future financing options or strategic flexibility.
• The Guaranty Agreement by AIM exposes the subsidiary's assets to the Lender, potentially impacting the Company's overall financial stability.
• The extensive arbitration provisions, including specific rules and venue in Utah, could make dispute resolution complex and potentially costly for the Company.
• The waiver of jury trial in the agreement removes a traditional legal recourse for the Company in disputes with the Lender.

Future Outlook

The Company intends to use the net proceeds from the Note Financing for working capital and other general corporate purposes, indicating a focus on supporting ongoing operations and strategic initiatives.

Management Comments

• The Company entered into the Note Purchase Agreement to secure financing for working capital and general corporate purposes.

Industry Context

This debt financing indicates that Vivos Therapeutics, like many smaller or growth-stage companies, is seeking capital to fund its operations and strategic objectives. The terms, including a significant original issue discount and strict covenants, suggest that traditional, less expensive financing options may be limited, which is not uncommon for companies in specialized medical device or therapeutic sectors that may not yet be consistently profitable or have substantial cash flow.

Comparison to Industry Standards

• The Original Issue Discount (OID) of $587,340 on a $2,093,340 principal amount (resulting in $1.5 million net proceeds) is a high effective cost of capital, often seen in distressed financing or for companies with limited access to conventional credit markets. For example, a company with stronger financial standing might secure a loan with a much lower effective interest rate and minimal or no OID.
• The 18% default interest rate is at the higher end of what is typically seen in corporate debt, reflecting increased risk perception by the lender, comparable to rates charged to companies with significant credit concerns.
• The requirement for a subsidiary (AIM) to guarantee the unsecured note is a common practice when the parent company's standalone creditworthiness is insufficient, similar to how a holding company might guarantee debt for an operating subsidiary.
• The inclusion of strict covenants, such as maintaining NASDAQ listing and restrictions on further debt without consent, is standard for high-risk debt, aiming to protect the lender's position and prevent actions that could further impair the borrower's ability to repay. This is often more stringent than covenants found in investment-grade corporate bonds.

Corporate Governance

Related Party Transactions

• Avondale Capital, LLC, the Lender, is an affiliate of Streeterville Capital, LLC. Streeterville Capital, LLC previously entered into a senior secured loan with Vivos Therapeutics, Inc. on June 9, 2025.

Stakeholder Impact

• Shareholders: Potential for future dilution if the Company struggles with repayment and needs to raise more capital on less favorable terms. The non-convertible nature of this note avoids immediate dilution but the high cost of debt could impact profitability.
• Creditors: The new debt, while unsecured, is guaranteed by a wholly-owned subsidiary (AIM), potentially impacting the recovery prospects of other unsecured creditors of AIM. The strict covenants also provide the lender with significant control over the Company's financial actions.
• Employees: The securing of working capital can provide stability for ongoing operations, which is generally positive for employees, reducing immediate uncertainty.

Next Steps

• Commence weekly payments of $69,778 starting December 12, 2025.
• Consider early repayment of the Note by January 4, 2026, to benefit from the $286,140 discount.

Key Dates

Recommendation

The filing presents a mixed signal. On one hand, Vivos Therapeutics has successfully secured $1.5 million in working capital, which is essential for ongoing operations and can alleviate immediate liquidity concerns. This capital infusion could be seen as a positive for the Company's short-term stability. However, the terms of the financing are quite onerous, including a substantial Original Issue Discount (OID) and transaction fees that significantly reduce the net proceeds, implying a high effective cost of capital. The strict covenants and high default interest rate also suggest that the Company is operating under significant financial pressure and has limited access to more favorable financing. The non-convertible nature of the note is a plus as it avoids immediate dilution. Given these conflicting factors – necessary capital secured at a high cost with restrictive terms – a 'hold' recommendation is appropriate. Investors should monitor the Company's ability to meet its weekly payment obligations and its progress towards profitability, as well as its ability to potentially take advantage of the early prepayment discount, before making a more definitive investment decision.

Keywords

Vivos Therapeutics, VVOS, Promissory Note, Avondale Capital, Working Capital, Debt Financing, SEC Filing, 8-K, Corporate Finance, Original Issue Discount, Guaranty Agreement