Note 8 — Borrowings

Line of Credit

The Company has a line of credit with Regions Bank that allows for advances up to $150,000 with interest at the Prime Rate plus 4.75% with a floor of 4.75% and no maturity date. On December 31, 2025, the outstanding balance on the line of credit was $0 at a prime rate of 7.00% plus 4.50%, or 11.50%. On December 31, 2024, the outstanding balance on the line of credit was $148,976 at a prime rate of 7.75% plus 4.75%, or 12.50%. The line of credit is collateralized by Company assets. 

Convertible Note Facility, Redemption Agreement, and Amendment to the Articles of Incorporation

On November 12, 2025, the Company and the Investors entered into the Securities Purchase Agreement, pursuant to which the Company agreed to, among other things, issue and sell, and the Investors agreed to purchase, in multiple closings, a new series of senior secured convertible notes of the Company in an aggregate original principal amount of up to $250,000,000, subject to the satisfaction or waiver of certain closing conditions.

Pursuant to the Purchase Agreement, on November 12, 2025, the Company issued a Token Right (the “Token Right”) to certain Investors, pursuant to which the holder will be entitled to receive upon exercise of the Token Right and for no further consideration an aggregate number of Right Tokens (as defined therein) equal to the sum of (i) fifty percent (50%) of any and all Tokens (as defined in the Token Right) purchased by the Company using the net proceeds of each Closing and (ii) twenty-five percent (25%) of any and all Tokens purchased by the Company using the net proceeds of any Other Financing (as defined therein). The Token Right can be exercised at any time beginning on the date that is the sixty (60) day anniversary of the issuance date of the Token Right and ending on the ten (10) year anniversary of the issuance date of the Token Right.

In connection with the Purchase Agreement, on November 12, 2025, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to file a registration statement on Form S-1 with SEC to register the resale of all of the Conversion Shares and shares of Common Stock otherwise issuable pursuant to the Notes. The Company subsequently received a waiver of this condition.

In connection with the Purchase Agreement, on November 12, 2025, the Company and Mr. La Rosa entered into a redemption agreement (“Redemption Agreement”), pursuant to which, on the Initial Closing Date, the Company will redeem and immediately cancel and return to the status of “blank check” preferred stock of the Company, a number of Mr. La Rosa’s shares of Series X Preferred Stock such that, immediately after such redemption, he will own shares of Series X Preferred Stock representing not less than 80% of the total voting power of the Company for a redemption price of $2,000,000 payable on the Initial Closing Date, and $500,000 contingently payable upon the satisfaction by the Company of its SEC filing requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for four consecutive quarters and certain other four-quarter requirements set forth therein. Mr. La Rosa’s remaining shares of Series X Preferred Stock will be redeemed by the Company at a subsequent time determined by the Board or otherwise as set forth in the Redemption Agreement as described below, in each case for no additional consideration. These redemptions of the Series X Preferred Stock are conditioned upon stockholders’ approval and effectiveness of the Certificate of Amendment (as defined below).

The parties also agreed that in the event that the Company receives any notice from a prospective investor (including the Investors) that such prospective investor would provide, or commit to provide, equity or debt financing to the Company but for the existence of any then outstanding shares of Series X Preferred Stock, the Company will, within twenty-four (24) hours following receipt of such notice, redeem all remaining issued and outstanding shares of Series X Preferred Stock for no additional consideration.

In addition, under the Redemption Agreement, Mr. La Rosa agreed, subject to certain customary exceptions, not to sell, offer to sell, contract or agree to sell, pledge or otherwise dispose of, directly or indirectly, any of his shares of the Series X Preferred Stock during the term of the Redemption Agreement, without the consent of the Lead Buyer.

In accordance with the terms of the Securities Purchase Agreement, the stockholders of the Company holding a majority of the voting power approved (1) the issuance of all Notes and Conversion Shares in excess of 19.99% of the Company’s issued and outstanding common stock at a price less than the minimum price on November 12, 2025 by written consent in lieu of having a stockholders’ meeting; (2) the Certificate of Amendment, and (3) the Reverse Stock Split. On November 24, 2025, the Company filed a preliminary information statement on Schedule 14C with the SEC notifying stockholders of such written consent. On December 4, 2025, the Company filed a definitive information statement on Schedule 14C with the SEC and commenced mailing the same to the stockholders of record of the Company as of the close of business on November 12, 2025. On December 25, 2025, such approval became effective.

On January 8, 2026, the Company consummated the initial closing (the “Initial Closing”) under the Securities Purchase Agreement, pursuant to which it issued to the Investors a senior secured convertible note in the principal amount of $11,000,000 (the “Initial Note”), together with a previously issued Token Right (as defined in the Securities Purchase Agreement), for an aggregate purchase price of $9,900,000. The Initial Note is convertible into Conversion Shares, at an initial conversion price equal to $8.347, subject to adjustment as provided in the Initial Note, provided that in no event may the conversion price be less than the floor price of $7.78, which will be lowered pursuant to the terms of the Initial Note for the Initial Note and all other Notes upon the effectiveness of the stockholders’ approval of such reduction (the “Floor Price”). The Initial Note bears interest at a rate of ten percent (10%) per annum that is payable monthly in arrears commencing on February 1, 2026, matures twenty-four (24) months from the date of issuance and contains customary covenants and events of default (upon which the interest rate will increase to a rate of nineteen percent (19%) per annum) as described in the Initial Note.

In connection with the Initial Closing on January 8, 2026, as contemplated under the Securities Purchase Agreement: (i) the Company and each of its subsidiaries (each, a “Grantor”), and a collateral agent (the “Collateral Agent”) for the benefit of the holders of Obligations (as defined in the Security Agreement), entered into a Security and Pledge Agreement (the “Security Agreement”) with respect to the Notes, pursuant to which each Grantor granted the Collateral Agent, for the benefit of the Secured Parties (as defined in the Security Agreement), a security interest in such Grantor’s right, title and interest in and to all or substantially all of its properties and assets, or in which or to which such Grantor has any rights, whether then owned or thereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “Collateral”); (ii) each subsidiary of the Company also entered into a guarantee agreement (the “Subsidiary Guaranty”) whereby each Subsidiary of the Company guaranteed to the Investors the prompt and full payment and performance of the obligations of the Company and each Subsidiary under the Purchase Agreement and other Transaction Documents; and (iii) the Company and the Collateral Agent entered into an Intellectual Property Security Agreement (“Intellectual Property Security Agreement”), pursuant to which the Company granted to the Collateral Agent a lien and security interest in certain intellectual property of the Company.

As a condition to the Initial Closing as provided in the Securities Purchase Agreement: (i) on December 22, 2025, the Company filed the Certificate of Amendment, which became effective on December 26, 2025; and (ii) on January 5, 2026, the Company and the Collateral Agent also entered into that certain Account Control Agreement.

The Company received $9,635,000 in net proceeds from the Initial Closing, that will be used as follows: (i) $7,000,000 of net proceeds to acquire Note Purchased Crypto (as defined in the Notes) as a digital asset for the Company’s balance sheet, (ii) $2,000,000 of the net proceeds to redeem a portion of the outstanding shares of the Series X Super Voting Preferred Stock pursuant to the Redemption Agreement (as defined in the Initial 8-K), (iii) $500,000 of the net proceeds will be kept in a controlled account to fund the redemption of remaining shares of the Series X Super Voting Preferred Stock in accordance with the terms of the Redemption Agreement, and (iv) any remaining proceeds, for general corporate purposes, working capital, acquisitions and other strategic transactions.

Curvature Securities LLC served as placement agent in connection with the offering described herein and will receive cash compensation not exceeding 7% of the gross proceeds of the Initial Closing.

On the Initial Closing, pursuant to the terms of the Redemption Agreement, the Company redeemed 200 shares of the Series X Super Voting Preferred Stock held by Mr. Joseph La Rosa, the Chief Executive Officer of the Company, and the Company and Mr. La Rosa agreed that the Company will pay Mr. La Rosa a portion of the Fixed Redemption Price (as defined in the Redemption Agreement) equal to $1,700,000 immediately after the Initial Closing and the remaining $300,000 of the Fixed Redemption Price will be paid to Mr. La Rosa at a later date to be agreed by the Company and Mr. La Rosa. 

The Company entered into the Securities Purchase Agreement and transactions contemplated thereby to secure immediate and committed access to capital at a time when alternative financing sources were either unavailable or significantly more dilutive and restrictive. The facility was intended to provide critical liquidity to support ongoing operations, address going concern considerations, and preserve enterprise value. In addition, the Company sought to strengthen its balance sheet and position itself to deploy capital into strategic initiatives, including investments in stablecoins, A.I. infrastructure, and data center opportunities, which management believes have the potential to enhance long-term shareholder value. Unlike traditional financing, the structure allows the Company to draw capital incrementally, providing flexibility to align funding with operational needs and market conditions. While the transaction includes costs such as potential dilution and derivative liabilities, management determined that these were justified given the significant risk to the business if capital was not secured. The transaction was negotiated at arm’s length and, in management’s view, represents a reasonable and necessary financing solution under the circumstances.

Senior Secured Convertible Note

On February 4, 2025, the Company and an Investor entered into the SPA, pursuant to which the Company issued to the Investor on such date: (i) a Senior Secured Convertible Note in the original principal amount of $5,500,000 which matures on February 4, 2027 (the “Initial Note”); and (ii) sixteen (16) warrants (the “Incremental Warrants”), each to purchase additional Notes in an original principal amount up to $2,500,000 at an exercise price of $2,256,250, in substantially the same form as the Initial Note (the “Incremental Notes” and together with the Initial Note, the “Notes”). The purchase price paid by the Investor under the SPA for the Initial Note and Incremental Warrants was $4,963,750.

The Initial Note accrues interest at a rate of 12% per annum, calculated on the basis of a 360-day year. Interest is payable quarterly in arrears, meaning that payments are due at the end of each calendar quarter for interest accrued during that quarter. Interest is built into the fair value of the Note.

In connection with the closing of the Initial Note, the Company entered into a Registration Rights Agreement dated February 4, 2025, obligating the Company to file and maintain the effectiveness of one or more registration statements with the SEC covering the resale of the shares of common stock issuable upon conversion of the Notes and related instruments. The Company was required to file an initial registration statement with the SEC within 30 calendar days of the closing date and have it declared effective within 90 calendar days (or 120 days if subject to full SEC review). The Company successfully filed the registration statement on time per the agreed terms for the Initial Note. The Company is also subject to certain limitations on entering into conflicting registration rights agreements through the applicable date and must allocate available registration capacity pro rata among holders.

The Notes may be prepaid by the Company, in whole or in part, at its option with at least 30 calendar days’ notice to the holder, provided no Event of Default has occurred and is continuing. Voluntary prepayments are subject to a redemption premium equal to 120% of the outstanding principal, accrued interest, and any applicable charges being redeemed. The Company may not issue more than one redemption notice within any 20-trading-day period, and such notices are irrevocable once issued.

Certain mandatory redemptions, including those triggered by Events of Default, Bankruptcy Events, or Change of Control transactions, are contractually deemed voluntary prepayments and are also subject to the 120% redemption premium. The redemption price in such scenarios is the greater of (i) 120% of the outstanding amount or (ii) a formula based on the conversion rate and the highest closing price of the Company’s common stock during a specified period.

Other redemptions, such as those triggered by subsequent placements or asset sales, are payable at 100% of the applicable amount and are not subject to a premium.

On May 23, 2025, the Company and the Investor holding the Initial Note and Incremental Warrants entered into a waiver agreement pursuant to which, effective as of May 20, 2025, through May 30, 2025, the holder waived all rights to default-related penalties, default interest, and acceleration of any amounts due under the Initial Note, as well as any other rights arising from an event of default under the SPA, the Initial Note, the Incremental Warrants, and the related transaction documents, specifically with respect to the Company’s untimely filing of its Quarterly Report on Form 10-Q. In addition, the Investor waived the requirement under the related Registration Rights Agreement to register for resale the shares of common stock issuable upon conversion of the Notes (other than the Initial Note) in the initial registration statement filed by the Company with the SEC on February 14, 2025, and all related rights to receive any Registration Delay Payments (as defined in the Registration Agreement). The Company agreed to file subsequent registration statements within thirty (30) calendar days following the issuance of any Incremental Notes pursuant to the exercise or call of an Incremental Warrant, registering for resale by the Investor all shares issuable upon the conversion of such notes.

On June 18, 2025, the Company and the Investor entered into an Amendment and Exchange Agreement (the “Exchange Agreement”) pursuant to which (among other things) the Investor surrendered and exchanged all of its Incremental Warrants in exchange for (the “Exchange”) 6,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”). On the same date, the Company filed a Certificate of Designation of Rights and Preferences of the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of Nevada. The Initial Note remains outstanding post-Exchange. See Note 10 – Stockholder’s Equity for further discussion.

On June 26, 2025, the Company and the Investor entered into an Amendment No. 1 to the Initial Note to correct the maturity date to February 4, 2027 and amend the Alternate Conversion Price to be the greater of (i) 95% of the lowest VWAP of the common stock of the Company during the seven (7) consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice (as defined in the Initial Note) and (ii) the Floor Price (as defined in the Initial Note).

Upon the modification on June 26, 2025, the Company evaluated the debt modification guidance, including the troubled debt restructuring guidance, determining that the modification of this instrument for which the Company made a fair value option election pursuant to Subtopic 825-10 at inception, is not a troubled debt restructuring and rather, an extinguishment of the existing Initial Note. The Company recorded a gain on debt extinguishment of $4,113,000, which pursuant to ASC 470-50-40-2 for all extinguishments of debt, represents the difference between the reacquisition price (which includes any premium) and the net carrying amount of the debt being extinguished (which includes any deferred debt issuance costs) should be recognized as a gain or loss when the debt is extinguished. There were no deferred debt issuance costs as the Initial Note was accounted for under the fair value option at issuance, and regarding the amendment, the Company incurred approximately $2,000 in costs, which were expensed in the period incurred.

Pursuant to this agreement the Company has the right to convert the principal and accrued interest into shares of common stock at the Conversion Price or Alternate Conversion Price which is the greater of (i) 95% of the lowest VWAP of the Common Stock during the seven consecutive trading days immediately preceding the conversion. As of December 31, 2025 the Company converted $1,450,000 of principal and $112,000 of accrued interest at a conversion premium of 20% for $312,000 resulting in a total value of $1,874,000 converted into 8,215 shares of common stock. 

Cash Advance Agreements

On February 5, 2025, the Company paid off their Standard Merchant Cash Advance Agreement (the “Cash Advance”) with Cedar Advance LLC (“Cedar”) in the amount of $354,450, resulting in a loss on extinguishment of debt of $83,310. The Company also paid off their other Standard Merchant Cash Advance Agreement (the “Arin Cash Advance Agreement”) with Arin Funding LLC (“Arin”) in the amount of $340,421, resulting in a loss on extinguishment of debt of $68,615.

During the years ended December 31, 2025 and 2024, non-cash interest expense of $63,160 and $391,836, respectively, was recorded from the amortization of the debt discount and the debt issuance costs related to these Cash Advances. As of December 31, 2024, the remaining gross balance of the Cash Advances was $833,766, with a remaining unamortized discount of $215,085, for a net balance of $618,861.

On July 3, 2023, the Company entered into a Cash Advance Agreement with Cedar for the purchase and sale of future receipts pursuant to which the Company sold in the aggregate $764,150 in future receipts of the Company for $500,650. The Company recorded a debt discount in the amount of $237,150 based upon the difference between the amount of future receipts sold and the actual proceeds received by the Company and debt issuance costs of $26,350. The debt discount and debt issuance costs were reflected as a reduction on the outstanding liability and were being amortized as non-cash interest expense using the effective interest method over the term of the agreement. The Cash Advance was fully repaid in January 2024.

On May 20, 2024, the Company entered into another Standard Merchant Cash Advance Agreement (the “2024 Cash Advance”) with Cedar for the purchase and sale of future receipts pursuant to which the Company sold in the aggregate $761,250 in future receipts of the Company for $500,000. Future receipts include cash, check, credit or debit card, electronic transfer, or other form of monetary payment. Until the purchase price has been repaid, the Company agreed to pay Cedar $23,000 per week. In addition, the Company granted Cedar a security interest in all the Company’s accounts, including deposit accounts and accounts receivable and proceeds. The Company recorded a debt discount in the amount of $236,250 based upon the difference between the amount of future receipts sold and the actual proceeds received by the Company and debt issuance costs of $25,000. The debt discount and debt issuance costs were reflected as a reduction on the outstanding liability and were being amortized as non-cash interest expense using the effective interest method over the term of the agreement.

On October 7, 2024, the Company entered into a Standard Merchant Cash Advance Agreement (the “Cedar Cash Advance Agreement”) with Cedar pursuant to which the Company sold to Cedar $616,250 of its future receivables, including cash, check, credit or debit card, electronic transfer, or other form of monetary payments from third parties (the “Receivables Purchased Amount”), for a purchase price of $425,000 less underwriting fees and expenses paid, or for net funds of $403,750 to the Company. The parties agreed that a portion of the proceeds equal to $301,250 were to be paid by the Company to Cedar pursuant to the May 20, 2024 cash advance agreement discussed above. This payment was accounted for as an extinguishment of this May 20, 2024 cash advance agreement debt and the Company recorded a loss of $54,829 representing the remaining unamortized deferred financing costs and discount. Pursuant to the Cedar Cash Advance Agreement, Cedar was expected to withdraw $15,400 a week directly from the Company’s bank account until the Receivables Purchased Amount due to Cedar under the Cedar Cash Advance Agreement is paid in full. In the event of a default (as defined in the Cedar Cash Advance Agreement), Cedar, among other remedies, could demand payment in full of all amounts remaining due under the Cedar Cash Advance Agreement. To guarantee the Company’s satisfaction of its obligations under the Cedar Cash Advance Agreement, the Company granted Cedar a security interest in all its accounts, including deposit accounts and accounts receivable and proceeds.

On October 7, 2024, the Company, entered into a Standard Merchant Cash Advance Agreement (the “Arin Cash Advance Agreement”) with Arin Funding LLC (“Arin”) pursuant to which the Company sold to Arin $588,000 of its future receivables for the sale of its goods and services (the “Receivables Purchased Amount”), for a purchase price of $420,000 less fees and expenses paid, or for net funds of $400,000 to the Company. Pursuant to the Arin Cash Advance Agreement, Arin was expected to withdraw $15,474 a week directly from the Company’s bank account until the Receivables Purchased Amount due to Arin under the Arin Cash Advance Agreement was paid in full. In the event of a default (as defined in the Arin Cash Advance Agreement), Arin, among other remedies, could demand payment in full of all amounts remaining due under the Arin Cash Advance Agreement. To guarantee the Company’s satisfaction of its obligations under the Arin Cash Advance Agreement, the Company granted Arin a security interest in all its accounts, including, but not limited to, deposit accounts, accounts receivables, other receivables, chattel paper, documents, equipment, general intangibles, instruments and inventory.

Notes Payable-Senior Secured Promissory Notes

In connection with the execution of the SPA mentioned above, during the first quarter of 2025, the Company repaid the remaining principal and accrued interest of all three outstanding senior secured promissory notes issued in 2024 to an accredited investor thereby fully extinguishing the Company’s debt obligations under the 2024 note issuances discussed below.

In addition, the accredited investor elected to convert an aggregate principal and interest amount of $483,751 of the notes into 173 shares of the Company’s common stock in accordance with the terms of the applicable note agreements. The Company also settled all vested and outstanding warrants previously held by the investor. Two of the three warrants were exercised for a total of 110 shares of common stock. The remaining warrant was repurchased by the Company for $379,083 in cash on January 24, 2025, resulting in the elimination of all vested warrants held by the investor.

Prior to extinguishment, on January 8, 2025, the Company and the accredited investor entered into that certain Waiver, waiving the Event of Default (as defined) under these senior secured promissory notes. The waiver included, among other provisions, waiving the rights to all default penalties, default interest, the acceleration of any amounts and waiving the restriction for the Company to enter into a variable rate transaction, of which the consummation could be considered an event of default, provided the proceeds from such financing are used to repay, in full, the notes described below.

Also prior to extinguishment, on January 22, 2025, the Company and the Holder signed an amendment No. 1 to the Waiver. Pursuant to the Amendment, the Company shall pay 100% of any cash proceeds raised by the Company from the sale of securities pursuant to its Registration Statement on Form S-3 to the Holder first towards the repayment of the Redemption Price until it is paid in full, and after that towards the repayment of the Notes. The Amendment also provides that, if the Redemption Agreement becomes null and void pursuant to the terms of the Redemption Agreement, then all Proceeds previously paid by the Company to the Holder pursuant to the Redemption Agreement shall instead be applied towards the repayment of the Notes.

The interest expense incurred for these senior secured promissory notes prior to being retired was $23,798 for the year ended December 31, 2025. The interest expense incurred for the senior secured promissory notes was $264,490 for the year ended December 31, 2024.

On February 20, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note with an aggregate principal amount of $1,052,632 with a maturity date twelve months from the issue date. The note had an original issue discount of 5% and a coupon rate of 13% per annum. In addition, the Company issued 8 shares of the Company’s common stock as a commitment fee, a warrant to purchase 15 shares of the Company’s common stock with an exercise price of $24,000, exercisable until the five-year anniversary of the closing date, and a second warrant to purchase 12 shares of the Company’s common stock with an exercise price of $18,000. The second warrant would only become exercisable if the note was not fully paid on or before the maturity date, at which point the warrant was exercisable until the five-year anniversary of the vesting date. The second warrant would be cancelled and extinguished if the note was fully paid on or before the note maturity date. The investor also had a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the note. The principal amount and interest under the note were convertible into shares of the Company’s common stock at a conversion price of $20,000 per share unless the Company failed to make an amortization payment when due, in which case the conversion price would be the lower of $20,000 or 85% of the lowest volume weighted average price (VWAP) of the shares prior to five days of the conversion. The proceeds of the note were used for business development and general working capital purposes. In connection with this financing, the Company also issued to its placement agent, Alexander Capital L.P. (“Alexander Capital”), a 5-year warrant to purchase 3 shares of the Company’s common stock at an exercise price of $12,000 per share. During the year ended December 31, 2024, the investor converted $69,534 of accrued interest and $746,440 of principal to 110 shares of common stock.

On April 1, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note with an aggregate principal amount of $1,316,000 with a maturity date twelve months from the issue date. The note had an original issue discount of 5% and a coupon rate of 13% per annum. In addition, the Company issued 6 shares of the Company’s common stock as a commitment fee, a warrant to purchase 19 shares of the Company’s common stock with an exercise price of $24,000, exercisable until the five-year anniversary of the closing date, and a second warrant to purchase 19 shares of the Company’s common stock with an exercise price of $18,000. The second warrant would only become exercisable if the note was not fully paid on or before the maturity date, at which point the warrant was exercisable until the five-year anniversary of the vesting date. The second warrant would be cancelled and extinguished if the note is fully paid on or before the note maturity date. The investor also had a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the note. The principal amount and interest under the note were convertible into shares of the Company’s common stock at a conversion price of $20,000 per share unless the Company fails to make an amortization payment when due, in which case the conversion price would be the lower of $20,000 or 85% of the lowest VWAP of the shares prior to five days of the conversion. The proceeds of the note were used for business development and general working capital purposes. During the year ended December 31, 2024, the investor converted $71,713 of accrued interest to 7 shares of common stock.

On July 16, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note with an aggregate principal amount of $444,600 with a maturity date twelve months from the issue date. The note had an original issue discount of 5% and a coupon rate of 13% per annum. In addition, the Company issued 4 shares of the Company’s common stock as a commitment fee, a warrant to purchase 7 shares of the Company’s common stock with an exercise price of $24,000, exercisable until the five-year anniversary of the closing date, and a second warrant to purchase 7 shares of the Company’s common stock with an exercise price of $18,000. The second warrant only became exercisable if the note was not fully paid on or before the maturity date, at which point the warrant was exercisable until the five-year anniversary of the vesting date. The second warrant would be cancelled and extinguished if the note was fully paid on or before the note maturity date. The investor also had a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the note. The principal amount and interest under the note were convertible into shares of the Company’s common stock at a conversion price of $20,000 per share unless the Company failed to make an amortization payment when due, in which case the conversion price would be the lower of $20,000 or 85% of the lowest VWAP of the shares prior to five days of the conversion. The proceeds of the note were used for business development and general working capital purposes.

The Company evaluated the terms of the securities purchase agreements and determined that the commitment shares and the first warrants were freestanding instruments. The Company determined the commitment shares were to be classified as equity, which are initially recorded at fair value with no subsequent remeasurement. The Company determined that the first warrants were classified as a derivative liability, which were initially recorded at fair value with changes in fair value recorded in earnings. The second warrants and certain terms within the debt notes were contingent upon certain possible events that were within the Company’s control. The Company determined that the contingencies were not probable and, as such, were not recorded as contingent liabilities.

The Company incurred issuance costs that were directly attributable to issuing the debt instruments in the amount of $346,248, which included placement fees of $202,518 paid to Alexander Capital. Of the debt issuance costs, $326,879 was paid in cash and the remainder was the value of a warrant issued to Alexander Capital. The Company determined that the warrant issued to Alexander Capital was classified as equity. The issuance costs were not specifically related to any instrument within the transactions and, as such, were allocated in the same proportion as the proceeds were allocated to each of the debt transactions, the committed shares, and the warrants.

On September 25, 2024, the Company entered into an agreement to amend the three Senior Secured Promissory Notes entered into in February, April, and July of 2024. The amendment extended the maturity date for all three notes to August 1, 2025, and delayed payments until February 1, 2025. In lieu of all payments required under the original notes, $250,000 per month was to be paid beginning February 1 and each month after, until all three notes were paid in full. In addition, $200,000 was paid on September 30, 2024 and applied to the February note. This amendment was accounted for as an extinguishment of debt, and the Company recorded a loss of $722,558. The Company had accrued interest on the notes totaling $264,490 as of December 31, 2024.

Notes Payable-Promissory Note

On September 27, 2024, the Company entered into a promissory note payable whereby the Company borrowed $200,000 bearing interest at 12.5% per annum. The note was payable in three-monthly installments of $75,000. The proceeds of the note were used to pay down the senior secured promissory note entered into in February 2024. The remaining balance on the note as of December 31, 2024 was $148,725. This note was fully repaid in February 2025. The interest expense incurred for the promissory note was $1,276 for the year ended December 31, 2025.

Notes Payable-Economic Injury Disaster Loans

On June 1, 2020, the Company received net proceeds from Economic Injury Disaster Loans (the “EIDL Loans”) from the Small Business Administration (“SBA”) in the aggregate amount of $365,300. After processing fees, the net proceeds were $365,100 under the terms. The EIDL Loans, which are in the form of promissory notes, mature in May 2050 and bear interest at a rate of 3.75% per annum. Payments are to be made monthly, and each payment is applied first to the interest accrued to the date of receipt of each payment and any remaining payment is applied to principal. The loan terms provide for a collateral interest for the SBA and limits the use of proceeds to working capital to alleviate the effects of COVID-19 on the Company’s economic condition.

During the fourth quarter of 2023, the Company acquired two franchisees that had outstanding Economic Injury Disaster Loans (the “EIDL Loans”) in the aggregate of $263,000. During the first quarter of 2024, the Company acquired a franchise that had an outstanding EIDL Loan in the aggregate of $34,100. The Company acquired the EIDL Loans, and the EIDL loans have terms similar to the Company’s existing EIDL loans. The EIDL Loans mature in 2050 and bear interest at a rate of 3.75% per annum.

Future maturities of Economic Injury Disaster Loans as of December 31, 2025, were as follows:

Acquisition Settlement Agreement

One October 18, 2024, the Company entered into a mediated settlement agreement to purchase the remaining 49% of the non-controlling interest of the subsidiary Nona Legacy Powered By La Rosa Realty, Inc. for a total of $1,000,000 paid in equal monthly installments of $11,905 over a period of seven years with the first payment due on November 1, 2024. The settlement agreement releases the Company of any further claims and bears no interest.

Notes payable as of December 31, 2025 and December 31, 2024 were as follows: