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

NOTE 13. DEBT

 

A breakdown of the Company’s debt as of March 31, 2026 and December 31, 2025 is presented below:

 

   March 31, 2026   December 31, 2025 
Promissory note  $6,463,142   $7,513,867 
Debt discount and issuance cost   (198,427)   (215,408)
Total debt, net of debt discount and issuance costs   6,264,715    7,298,459 
Current portion of long-term debt   (1,158,735)   (1,186,833)
Current portion of debt discount and issuance cost   68,874    68,872 
Long-term debt  $5,174,854   $6,180,498 

 

Promissory Notes

 

In connection with the Green’s Natural Foods acquisition, on October 14, 2022, the Company issued a secured promissory note (the “Greens Note”) in the principal amount of $3,000,000 as a portion of the purchase price. The Greens Note has a five-year term, an interest rate of 6.0% per annum and is secured by the assets of the Green’s Natural Foods. The outstanding balance was approximately $1,101,000 and $1,257,000 as of March 31, 2026 and December 31, 2025, respectively. The Company incurred approximately $17,000 and $26,000 interest expense for the three months ended March 31, 2026 and 2025, respectively.

 

In connection with the Ellwood Thompson’s acquisition, on October 1, 2023, the Company issued a secured promissory note (the “Ellwood Note”) in the principal amount of $750,000, and discounted present value of $718,000 as a portion of the purchase price. The Ellwood Note has a five-year term, an interest rate of 6.0% per annum. The outstanding balance of the Ellwood Note was approximately $428,000 and $452,000 in principal amount as of March 31, 2026 and December 31, 2025, respectively. The Company recognized interest expense of approximately $7,000 and $9,000 for the three months ended March 31, 2026, and 2025, respectively.

 

In connection with the GreenAcres Market acquisition, on August 23, 2024, the Company issued a secured promissory note (the “GreenAcres Note”) in the principal amount of $1,825,000 as a portion of the purchase price. The GreenAcres Note has a five-year term, an interest rate of 6.0% per annum and is secured by the assets of GreenAcres Market. The outstanding balance was approximately $1,305,000 and $1,390,000 as of March 31, 2026 and December 31, 2025, respectively. The Company incurred approximately $20,000 and $25,000 interest expense for the three months ended March 31, 2026 and 2025, respectively.

 

 

Acquisition Loan

 

On July 18, 2024 (the “Loan Effective Date”), the Company entered into a loan and security agreement with a private lender for a $7,500,000 loan (the “Acquisition Loan”). A portion of the Acquisition Loan proceeds were used to acquire GreenAcres Markets. The loan is guaranteed by all of the subsidiaries of the Company (the “Guarantors”) and secured by all of the assets of the Company and the Guarantors. The Acquisition Loan has a term of three years and interest accrues at a rate of 12% on amounts borrowed. The Acquisition Loan may be prepaid at any time at a premium in the amount of ten percent (10%) of the principal amount of the Acquisition Loan outstanding prior to such prepayment. Payments on the Acquisition Loan are required to be made as follows: $1,125,000 on first anniversary of the Loan Effective Date, $1,875,000 on the second anniversary of the Loan Effective Date, and the remaining outstanding principal balance of principal and accrued interest on the third anniversary of the Loan Effective Date.

 

Throughout the year ended December 31, 2025 and first quarter of 2026, the Company entered into a series of exchange agreements (the “Exchange Agreements”) with the holders of the Acquisition Loan (the “Noteholders”), who are unrelated third parties, to convert portions of the outstanding principal and accrued interest into shares of the Company’s Class A common stock. These conversions were accounted for as debt extinguishments. The difference between the carrying amount of the extinguished debt and the fair value of the common stock issued was recognized as a loss on debt extinguishment.

 

In summary, as a result of these exchange agreements during the first quarter of 2026, the Company exchanged approximately $0.8 million of outstanding principal of the Acquisition Loan in exchange for 2,835,075 shares of the Company’s Class A common stock.

 

The following table summarizes the conversion activity during the three months ended March 31, 2026, and during the year ended December 31, 2025:

 

Exchange Agreement Date  Principal Converted   Shares Issued 
October 24, 2025  $192,569    660,075 
February 10, 2026   579,147    2,175,000 
Total converted in first quarter of 2026  $771,716    2,835,075 

 

 

Exchange Agreement Date  Principal Converted   Shares Issued 
March 2, 2025  $450,000    750,000 
April 3, 2025   500,000    1,136,364 
May 1, 2025   175,000    863,637 
July 15, 2025   1,000,000    2,500,000 
October 24, 2025   909,315    2,325,000 
Total converted in year 2025  $3,034,315    7,575,001 

 

As a result of these debt conversions, the Company recorded a net loss on extinguishment of debt of approximately $177,000 and $8,000 in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2026 and 2025, respectively. Following these transactions, $3,693,969 in principal remains outstanding under the Acquisition Loan as of March 31, 2026.

 

As of March 31, 2026, the Company had $620,852 of outstanding debt under the February 10, 2026 exchange agreement, which contains an embedded conversion feature allowing holders to convert debt into shares of Class A common stock at a conversion price equal to the closing bid price on the trading day prior to conversion. Under Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”), this embedded derivative meets the criteria for bifurcation and is required to be recognized at fair value. The NYSE American approved a maximum of 4,000,000 shares for this conversion, of which 2,175,000 shares had been issued as of March 31, 2026, leaving 1,825,000 shares available. Based on the March 31, 2026 closing stock price of $0.249 per share, the remaining shares have a fair value of $454,425, which equals the maximum principal eligible for conversion under the current share authorization. Accordingly, the embedded conversion feature had a fair value of $0.0 as of the balance sheet date, and no derivative liability was recorded.

 

Future Principal Payments

 

The Company may, at its option, at any time or from time to time prepay the outstanding principal amount or any accrued but unpaid interest, in each case in whole or in part, without penalty or premium, provided that any such prepayment of any outstanding amount of principal shall be accompanied by the payment of all accrued but unpaid interest on the amount of principal being prepaid, plus any costs and fees incurred.

 

 

The following table summarizes the five-year repayment schedule:

 

For the years ending December 31,    
2026 (remaining nine months)  $862,517 
2027   4,789,327 
2028   534,923 
2029   276,375 
2030   - 
Total  $6,463,142