Notes Payable |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Notes Payable [Abstract] | |
| NOTES PAYABLE | NOTE 8 – NOTES PAYABLE
November Loan Agreement
On November 7, 2023, the Company entered into a Business Loan and Security Agreement (the “November Loan Agreement”) with the lender (the “Lender”), pursuant to which the Company obtained a loan from the Lender in the principal amount of $2,100,000 with an interest rate of 49%, which satisfied the outstanding balance on the August Loan of $1,089,000 and includes origination fees of $140,000 (the “November Loan”). Pursuant to the November Loan Agreement, the Company granted the Lender a continuing secondary security interest in certain collateral (as defined in the November Loan Agreement). The total amount of interest and fees payable by us to the Lender under the November Loan will be $3,129,000, which will be repaid in 34 weekly installments ranging from $69,000 - $99,000. The November Loan Agreement had an original maturity date of July 2, 2024. As of March 31, 2026, the November Loan has an outstanding principal balance of $269,238, an unamortized debt discount of $0, and accrued interest of $0. As of March 31, 2026, the November Loan Agreement is in technical default, however, default provisions were not enforced by the Lender.
January Loan Agreement
On January 24, 2024, the Company entered into a Business Loan and Security Agreement (the “January Loan Agreement”) with a commercial funding source (the “January Lender”), pursuant to which the Company obtained a loan from the Lender in the principal amount of $3,600,000 and an interest rate of 49%, which includes origination fees of $252,000 (the “January Loan”). Pursuant to the January Loan Agreement, the Company granted the Lender a continuing secondary security interest in certain collateral (as defined in the January Loan Agreement). The total amount of interest and fees payable by the Company to the January Lender under the January Loan will be $5,364,000, which will be repayable by the Company in 30 weekly installments of $178,800. The January Loan Agreement had an original maturity date of August 12, 2024. The Company received net proceeds from the January Loan of $814,900 following repayment of the outstanding balance on the October Purchased Amount of $2,533,100.
On March 12, 2026, the Company entered into a payoff agreement (the “January Loan Payoff Agreement”) with the January Lender. Pursuant to the January Loan Payoff Agreement, the Company paid $1,064,986 to the January Lender to settle the outstanding balance of the January Loan Agreement and for the consent to enter into the March Note Purchase Agreement and Ignite Agreement. As of March 31, 2026, the January Loan had been paid off. In connection with January Loan Payoff Agreement, the Company paid approximately $160,000 as a one time charge, which is recorded in general and administrative expense.
May Note
On May 9, 2025, the Company entered into a securities purchase agreement (the “May Purchase Agreement”) with an accredited investor, pursuant to which the Company issued and sold a 30% Original Issue Discount Senior Secured Note (the “May 2025 Note”) to an accredited investor in the original principal amount of $3,114,286 for a purchase price of $2,000,000. The May 2025 Note bears interest at a rate of 10% per annum (the “May Note Interest Rate”) and has a maturity date of May 12, 2025 (the “May Note Maturity Date”). The May 2025 Note contains certain standard events of default, as defined in the May 2025 Note (each, an “May 2025 Event of Default”). Following any May 2025 Event of Default, the May 2025 Interest Rate on the May 2025 Note is automatically increased to 20% per annum to the extent permitted by law. The May 2025 Note is secured by the assets of the Company. In connection with the May Purchase Agreement, the Company entered into forbearance agreements (each, a “Forbearance Agreement”) with the holders (each, a “Holder”) of certain outstanding shares of the Company’s Series A-1 Convertible Preferred Stock and the Company’s Series C-1 Convertible Preferred Stock. Pursuant to the Forbearance Agreement, the Company agreed, in consideration of the settlement of the Holder’s claims and obligations with respect to one or more Triggering Events (as defined in the applicable Certificate of Designation) that: (i) provided that the Company receives gross proceeds of an aggregate of $10 million or more in the Proposed Offerings (as defined in the Forbearance Agreement), the Company shall concurrently redeem 5,124 of the Series A-1 Preferred Shares allocated pro rata among the holders of Series A-1 Preferred Shares in a Company Optional Redemption (as defined in the Certificate of Designation of the Series A-1 Preferred Shares), (ii) provided that the Company receives gross proceeds of $20 million or more in the Proposed Offerings, the Company shall concurrently redeem 8,200 of the Series A-1 Preferred Shares (or, if less, the remaining Series A-1 Preferred Shares then outstanding assuming the completion of any exercised Reinvestment Right (as defined in the Forbearance Agreement with respect thereto) allocated pro rata among the holders of Series A-1 Preferred Shares in a Company Optional Redemption, (iii) by no later than the first business day following the closing of any Additional Offering (as defined in the Forbearance Agreement), the Company shall redeem any remaining Series C-1 Preferred Shares (after giving effect to any Reinvestment Right with respect thereto) in a Company Optional Redemption, (iv) if the Company sells any securities pursuant to any VRT Potential Offering (as defined in the Forbearance Agreement), the Company shall apply 30% of the gross proceeds thereof to redeem any remaining Series C-1 Preferred Shares and/or any remaining Series A-1 Preferred Shares pro rata among the holders of Series C-1 Preferred Shares and/or Series A-1 Preferred Shares in a Company Optional Redemption, and (v) if the Company consummates any EVFM Sale (as defined in the Forbearance Agreement), the Company shall apply 30% of the gross proceeds thereof to redeem any remaining Series C-1 Preferred Shares and/or any remaining Series A-1 Preferred Shares pro rata among the holders of Series C-1 Preferred Shares and/or Series A-1 Preferred Shares in a Company Optional Redemption. The Forbearance Agreement has an expiration date of August 7, 2025. The Company applied $1,079,047 of the gross proceeds of the ATM as a payable to redeem approximately 939 of the Series A-1 Preferred Shares in a mandatory redemption. As of March 31, 2026, approximately 583 shares were redeemed, as a result approximately 356 Series A-1 Preferred Shares remain mandatorily redeemable. The remaining Series A-1 Preferred Shares are not contingently redeemable.
As of March 31, 2026, there was a remaining principal balance of $157,286, an unamortized debt discount of $0, and accrued interest of $178,582. During the three months ended March 31, 2026, the Company recognized $0 in amortization of debt discount. The May 2025 Note is in default status as of March 31, 2026.
March Note
On March 11, 2026, the Company entered into a Note Purchase Agreement (the “March Note Purchase Agreement”) with the several buyers (the “March Note Buyers”), pursuant to which the Company will issue its 10% original issue discount promissory notes (the “March 2026 Notes”) for the aggregate principal amount of $3,194,444. The aggregate funding amount from all March Note Buyers was $2,875,000 at closing.
The March 2026 Notes bear interest on the outstanding principal balance at 6% per annum and shall adjust to 12% per annum upon an Event of Default (as defined in the March 2026 Notes) so long as such Event of Default remains uncured. The March 2026 Notes may be prepaid at anytime with no penalty. The March 2026 Notes mature nine months from the issuance date, and all outstanding principal and accrued interest shall be due on the maturity date, September 11, 2026.
A March Note Buyer also has the right to roll all or any portion of the March 2026 Notes into securities issued by the Company in future capital-raising transactions.
As of March 31, 2026, there was a remaining principal balance of $3,194,444, an unamortized debt discount of $314,757, and accrued interest of $10,502. During the three months ended March 31, 2026, the Company recognized $24,687 in amortization of debt discount.
Interest
During the three months ended March 31, 2026 and 2025, the Company recognized an interest expense of $27,136 and $157,499, respectively, related to the notes payable. |