v3.26.1
DEBT
 3 Months Ended
Mar. 31, 2026
Debt Disclosure [Abstract]  
DEBT

5. DEBT

 

Subordinated Debentures Payable. On December 31, 2024, we issued a $750,000 unsecured debenture that is subordinated to the Company’s existing secured indebtedness, which is collateralized by a lien on substantially all of the Company’s assets. The debenture bears interest only at 8.25% payable quarterly in 2025, with monthly payments of $9,199 including principal and interest at 8.25% commencing on January 31, 2026. A balloon payment of $451,012 is due in full on December 31, 2030.

 

In consideration of the lender providing the financing, the Company issued warrants which entitle the holder to purchase 62,500 shares of our common stock at $4.50 per share.

 

On March 1, 2025, we issued a $75,000 unsecured debenture that is subordinated to the Company’s existing secured indebtedness, which is collateralized by a lien on substantially all of the Company’s assets. The debenture bears interest only at 8.25% payable quarterly in 2025. A balloon payment of $45,707 is due in full on December 31, 2030. In consideration of the lender providing this financing, the Company issued warrants which entitle the holder to purchase 6,250 shares of our common stock at $4.50 per share. If the debenture is paid in full on or before December 31, 2029, the warrants will have a remaining life of 58 months from March 1, 2025.

 

The factors used to calculate the estimated value of these warrants, and the resulting fair value, were as follows. 

    
Stock price  $2.75 
Exercise price per share  $4.50 
Original term (months)   70 
Volatility   116.58%
Annual rate of quarterly dividends   None 
Risk free interest rate   4.38%

  

 

       
    Expiration of Warrants if Debenture is Paid on December 31, 2030  Expiration of Warrants if Debenture is Paid on December 31, 2029
Warrants issued December 31, 2024   December 31, 2030  December 31, 2029
Warrants issued March 1, 2025   December 31, 2030  December 31, 2029

 

Our minimum future principal payments on all of the above subordinated debentures are as follows:

 

     
March 31, 2027  $56,579 
March 31, 2028   61,428 
March 31, 2029   66,692 
March 31, 2030   72,407 
December 31, 2030   554,461 
Total   811,567 
Less debt issuance cost   (104,771)
Net subordinated debenture payable   706,796 
Less current portion   (34,522)
Long term portion  $672,274 

  

Term Loan Payable. The term loan is secured by a first mortgage on our building and is payable in 119 equal monthly installments of $7,453 commencing October 30 2021, including principal and interest at 2.95% based on a 360 day year, plus a final payment of $806,750 (excluding interest) on September 30, 2031.  Our minimum future principal payments on this term loan, by year, are as follows:

 

       
March 31, 2027     57,421  
March 31, 2028     59,138  
March 31, 2029     60,907  
March 31, 2030     62,728  
March 31, 2031     64,604  
September 30, 2031     806,750  
Total     1,111,548  
Less debt issuance cost     (11,828)  
Net term loan payable     1,099,720  
Less current portion     (55,271)  
Long term portion   $ 1,044,449