| SCHEDULE OF LONG TERM DEBT |
SCHEDULE
OF LONG TERM DEBT
| |
|
March
31, 2026 |
|
|
December
31, 2025 |
|
| Revolving
Loan – On January 2, 2026, the Company amended its revolving loan agreement and decreased the maximum balance from $6,000,000
to $5,000,000. The maturity date of the revolving loan is extended to March 31, 2027, and has an annual interest rate equal
to the prime rate less 0.25% and a floor of 6.50%. In March 2026, the Company received a subsequent extension of the revolving loan
maturity date to March 31, 2027, at which time the Revolving Loan shall convert to a Term Loan and extend
to March 31, 2030. Debt covenants of this loan require the Company to maintain a minimum debt service coverage ratio
of at least 1.5 to 1 and is required to maintain a $1,000,000 pledge deposit. At March 31, 2026, the interest rate on this loan was
6.5%. The Company was in compliance with the debt covenants of this loan for the trailing twelve month period ended March 31, 2026,
and it is reasonably possible it will remain in compliance for the twelve months thereafter. |
|
$ |
2,500,000 |
|
|
$ |
5,000,000 |
|
| 2021 Promissory Note
– On June 17, 2021, the Company amended its loan agreement to reduce the principal amount with a financial institution for
10 years, annual interest rate of 3.5% for the first 5 years, and then floating at Wall Street Journal rate from years 6 to 10. The
loan is secured by the Company’s building, with a carrying value of $4.1 million, and matures on June 30, 2031. The note is
subject to a prepayment penalty. Debt covenants of this loan require the Company to maintain a minimum debt service coverage ratio
of at least 1.5 to 1. The Company was in compliance with the debt covenants of this loan for the trailing twelve month period ended
March 31, 2026, and it is reasonably possible it will remain in compliance for the twelve months thereafter. |
|
|
2,614,235 |
|
|
|
2,636,536 |
|
| February 2025 Convertible
Notes – On February 21, 2025, the Company issued convertible notes at a 10.0% discount and a principal balance of $3,300,000.
The notes had an interest rate of 5.0%, were paid in consecutive monthly installments beginning May 21, 2025 and matured on February
21, 2026. In the event of a default the Company could have been required to pay to the holders an amount equal to the principal outstanding,
plus any accrued interest through the date of payments, multiplied by 120%. The Company had the option to prepay the notes at any
time and the note holders have the option to convert the notes, in whole or in part, at any time. The Company elected the fair value
option to account for the convertible notes. This note was fully paid in February 2026. |
|
|
— |
|
|
|
691,010 |
|
| 2025 Term Loan –
On June 10, 2025, the Company entered into a term loan agreement with a principal balance of $3,500,000. The note has a floating
rate of 0.50% in excess of the Wall Street Journal Prime Rate and a floor of 6.50%, and is paid in monthly installments starting
July 1, 2025, and maturing June 30, 2028. As of March 2026, the interest on this loan is 7.25%. In the event of a default, the Company
could be required to pay the lender the entire principal balance, plus any accrued and unpaid interest immediately due and payable,
without notice or demand. The note is secured by a lien on collateral. Collateral includes all of the borrower’s rights, title,
and interest in all assets, including but not limited to accounts, equipment, deposits, intellectual property and books and records.
Debt covenants of this loan requires the Company to maintain a minimum debt service coverage ratio of at least 1.5 to 1. The Company
was in compliance with debt covenants of this loan for the trailing twelve month period ended March 31, 2026, and it is reasonably
possible it will remain in compliance for the twelve months thereafter. |
|
|
2,689,064 |
|
|
|
2,961,882 |
|
| October 2025 Convertible
Notes – On October 24, 2025, the Company issued convertible notes at a 10.0% discount and a principal balance of $2,200,000.
The notes had an interest rate of 5.0% are payable in consecutive monthly installments beginning January 24, 2026 and will mature
on October 24, 2026. In the event of a default the Company could be required to pay to the holders an amount equal to the principal
outstanding, plus any accrued interest through the date of payments, multiplied by 120%. The Company has the option to prepay the
notes at any time and the note holders have the option to convert the notes, in whole or in part, at any time into shares of the
Company’s Class A common stock. The Company elected the fair value option to account for the convertible notes. |
|
|
1,522,928 |
|
|
|
2,115,856 |
|
| November
2025 Convertible Notes – On November 26, 2025, the Company issued convertible notes at a 10.0% discount and a principal
balance of $1,100,000. The notes had an interest rate of 5.0% and are payable in consecutive monthly installments beginning February
26, 2026 and will mature on November 26, 2026. In the event of a default the Company could be required to pay to the holders an amount
equal to the principal outstanding, plus any accrued interest through the date of payments, multiplied by 120%. The Company has the
option to prepay the notes at any time and the note holders have the option to convert the notes, in whole or in part, at any time
into shares of the Company’s Class A common stock. The Company elected the fair value option to account for the convertible
notes. |
|
|
859,327 |
|
|
|
1,035,323 |
|
| Total
debt |
|
|
10,185,554 |
|
|
|
14,440,607 |
|
| Less:
current portion of long-term debt |
|
|
1,329,123 |
|
|
|
1,305,880 |
|
| Less:
convertible notes at fair value |
|
|
2,382,255 |
|
|
|
3,842,189 |
|
| Total
long-term debt |
|
$ |
6,474,176 |
|
|
$ |
9,292,538 |
|
|