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

10. NOTES PAYABLE

 

Notes payable at March 31, 2026 and December 31, 2025, were comprised of the following:

                             
   Collateral  Guarantors  Interest
rate		   Effective
rate(1)		   Due date  March 31,
2026		   December 31,
2025		 
AGREE secured construction loans, in default  AGREE hotels  -   10%   12%  January 1, 2027  $68,750,000   $68,750,000 
Circle 8 revolving credit facility  Circle 8 cranes with a book value of $27.1 million  -   9%   9%  June 16, 2026   6,801,000    7,205,000 
Circle 8 equipment financing notes  Circle 8 equipment with a book value of $3.0 million  -   6%   6%  Various dates through March 5, 2031   3,345,000    2,171,000 
Term note  -  Ault & Company, Inc. (“Ault & Company”) and Milton C. Ault, III   12%   77%  April 27, 2026   6,634,000    - 
Other  -  -   6%       Various   5,686,000    4,995,000 
Total notes payable                     $91,216,000   $83,121,000 
Less:                             
Unamortized debt discounts                      (78,000)   - 
Total notes payable, net                     $91,138,000   $83,121,000 
Less: current portion                      (88,772,000)   (82,055,000)
Notes payable – long-term portion                     $2,366,000   $1,066,000 

 

(1)Includes forbearance and extension fees and original issue discount (“OID”) costs that are amortized to interest expense over the life of the notes.

 

 

Second Amendment to AGREE Construction Loans 

 

In January 2026, the Company’s subsidiary AGREE amended the terms of its construction loans related to the AGREE properties. The amendment extended the maturity dates of the loans to January 1, 2027, subject to a potential one-year extension to January 1, 2028 upon satisfaction of certain conditions. The agreement also modifies the interest rate to Term SOFR plus 5.75%, with required monthly interest payments based on Term SOFR plus 4.75%, with the difference accruing and payable at maturity or earlier repayment. On April 1, 2026, the borrowers were required to make a principal payment of $3.0 million followed by monthly principal payments of $1.0 million through maturity. As of the date of this filing, AGREE and its subsidiaries have not made the required principal payments. While such non-payment constitutes an event of default under the loan agreements, the lenders have not provided a notice of default. The modification also requires the borrowers to fund interest reserves totaling approximately $2.0 million and provides temporary waivers of certain financial covenants through the scheduled maturity date. The interest reserves have not been funded as of the date of this filing. In connection with the modification, the borrowers paid an extension fee of approximately $0.3 million.

 

Circle 8 Financing

 

In March 2026, Circle 8 entered into a secured promissory note in the principal amount of $1.5 million for the purchase of a crane. The secured promissory note accrues interest at 5.9% per annum and will mature in March 2031.

Term Notes

 

In January and February 2026, the Company issued two short-term term notes to an institutional investor for aggregate gross proceeds of $10.0 million. The notes were originally scheduled to mature in March and April 2026, respectively, and require periodic principal repayments prior to maturity. The Company amended the note that was scheduled to mature in March 2026 to extend its maturity date to April 7, 2026. In connection with the extension, the Company agreed to pay an extension fee of approximately $0.1 million, which was added to the outstanding principal balance. The notes have been repaid in full.

 

Notes Payable Maturities

 

Principal maturities of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of March 31, 2026 were:

     
Year    
2026 (remainder)  $88,850,000 
2027   757,000 
2028   640,000 
2029   526,000 
2030   

320,000

 
Thereafter   

123,000

 
   $91,216,000 

 

Interest Expense

          
   For the Three Months Ended 
   March 31, 
   2026   2025 
Contractual interest expense  $4,877,000   $3,775,000 
Forbearance fees   74,000    12,000 
Amortization of debt discount   1,595,000    52,000 
Total interest expense  $6,546,000   $3,839,000