v3.26.1
4.0% Secured Convertible Promissory Notes Payable – Stockholders
12 Months Ended
Dec. 31, 2025
4.0% Secured Convertible Promissory Notes Payable – Stockholders [Abstract]  
4.0% SECURED CONVERTIBLE PROMISSORY NOTES PAYABLE – STOCKHOLDERS

NOTE 8 - 4.0% SECURED CONVERTIBLE PROMISSORY NOTES PAYABLE – STOCKHOLDERS

 

On August 26, 2016, the Company, pursuant to a Securities Purchase Agreement, issued $600,000 aggregate principal amount of its 4.0% Secured Convertible Promissory Notes due June 30, 2019 (the “New Secured Notes”) to certain accredited investors (“investors”). The Company issued additional New Secured Notes during the years 2016 through 2022.

 

The New Secured Notes are convertible by the holders, at any time, into shares of the Company’s authorized Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) at a conversion price of $90.00 per share, subject to adjustment for stock splits, stock dividends and similar transactions with respect to the Series C Preferred Stock only. Each share of Series C Preferred Stock is currently convertible into 100 shares of the Company’s common stock at a current conversion price of $0.90 per share, subject to full ratchet anti-dilution adjustment for one year and weighted average anti-dilution adjustment thereafter, as described in the Certificate of Designation of the Series C Preferred Stock. Upon a liquidation event, the Company shall first pay to the holders of the Series C Preferred Stock, on a pari passu basis with the holders of the Company’s outstanding Series A Preferred Stock and Series B Preferred Stock, an amount per share equal to 700% of the conversion price (i.e., $630.00 per share of Series C Preferred Stock), plus all accrued and unpaid dividends on each share of Series C Preferred Stock (the “Series C Preference Amount”). The Series C Preference Amount shall be paid prior and in preference to payment of any amounts to the Common Stock. After the payment of all preferential amounts required to be paid to the holders of shares of Series C Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and any additional senior preferred stock, the Series C Preferred Stock participates in further distributions subject to an aggregate cap of seven and one-half times (7.5x) the original issue price thereof, plus all accrued and unpaid dividends. In addition, pursuant to an Amended and Restated Security Agreement by and among the Company, the investors, the holders of the Company’s outstanding Notes and a collateral agent acting on behalf of the investors and holders of the Notes, the New Secured Notes are secured, pari passu with the Notes, by a lien against substantially all of the Company’s business assets.

 

The maturity dates of the New Secured Notes were extended by the investors most recently to April 30, 2025. An additional extension was provided by the New Secured Note holders on April 30, 2025. This extended the maturity date until May 31, 2025, with a provision stipulating that unless previously repaid in full such date shall be automatically extended on a month-to-month basis thereafter unless the New Secured Note holder submits notification in writing to the contrary.

 

The New Secured Notes are recorded as a current liability in the amount of $14,981,250 as of December 31, 2025 and 2024. Interest accrued on the New Secured Notes was $3,948,199 and $3,348,949 as of December 31, 2025 and 2024. Interest expense, including accretion of discounts related to these notes payable was $599,250 for the years ended December 31, 2025 and 2024.