Debt |
3 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Mar. 31, 2026 | |||||||
| Debt Disclosure [Abstract] | |||||||
| Debt | Note 9 – Debt Secured credit facility – In September 2023, the Company entered into a Loan and Security Agreement to open a credit facility with the maximum aggregate principal amount of $8,000,000 (the ABL). The maximum aggregate principal amount was reduced to $5,000,000 in 2026. Interest is accrued at the greater of (i) 12% and (ii) Prime Rate (6.75% as of March 31, 2026 and December 31, 2025) plus 3.75% per annum. The ABL matures in September 2026 with an automatic renewal for one year if not terminated before 60 days before the termination date. The outstanding balance on the ABL was $2,928,161 and $3,277,034 as of March 31, 2026 and December 31, 2025, respectively. In August 2025, the Company breached a financial covenant which put the ABL into technical default. Through the date of these financial statements, the breach has not affected the functionality of the facility and both parties are actively working to resolve the matter. The Company received a waiver of their default as of December 31, 2025.Loans payable – In May 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was established to provide economic relief to small businesses facing COVID-19-related economic hardships. In June 2020, the Company applied and received COVID relief funding for qualified small businesses under the Economic Injury Disaster Loan (EIDL) assistance program by the Small Business Administration (SBA). Per the terms of the EIDL agreement, the Company received total proceeds of $150,000. The loan matures in thirty years from the effective date of the loan and has a fixed interest rate of 3.75% per annum. As of March 31, 2026 and December 31, 2025, the outstanding balance was $160,389 and $160,296, inclusive of accrued interest, respectively. Interest expense for this loan was $2,286 for the three months ended March 31, 2026 and March 31, 2025.In December 2022 and 2023, the Company obtained three Mezzanine Secured Notes with shareholders in an aggregate principal amount of $1,700,000, of which $500,000 was from a related party. The notes originally accrued interest at a rate of 15% for the first month and monthly thereafter based on a range of 12-14% per annum. The loans were past due but subsequently extended through July 2026. As of March 31, 2026 and December 31, 2025, the principal balance of Mezzanine Secured Notes was $200,000, In April 2024, the Company issued a Secured Promissory Note with the principal balance of $2,500,000. The note originally accrued interest at $72,917 per month with default interest of $2,000 per day with original maturity in April 2025. The note was amended during 2025, to include reduced monthly payments, extension of the note, and settlement of all default and past due interest. As consideration, the Company transferred $1,000,000 of its investment at fair value and issued a $500,000 SAFE under the Company’s subsidiary Good Twin. The Note also contains a post-closing provision requiring the Company to transfer additional equity interests in Good Twin to the Lender if the Lender's ownership interest falls below ten percent (10%) upon SAFE conversion, with the fair market value of any such shares transferred applied as a dollar-for-dollar reduction to the outstanding principal balance. The Company determined this qualified as a debt modification, with the additional consideration charged to interest expense Additionally, in January 2026, the note was amended twice:
The outstanding balance was $1,067,000 and $1,267,000 as of March 31, 2026 and December 31, 2025, respectively. The Company incurred $0 and $1,033,668 of interest and late fees on the note during the three months ended March 31, 2026 and March 31, 2025, respectively. Promissory notes payable – In 2021 and 2022, the Company issued promissory notes with a total principal amount of $1,900,000. As of March 31, 2026 and December 31, 2025, the Company had promissory notes with the total outstanding principal balance of $1,650,000 and accrue interest at a rate of 12% per annum.The promissory notes mature between August 2026 and September 2027. Interest accrued on the notes is paid quarterly in arrears. The notes incurred $42,862 and $48,822 of interest expense for the three months ended March 31, 2026 and March 31, 2025, respectively, of which $151,937 and $149,758 was payable at March 31, 2026 and March 31, 2025, respectively. In January 2025, the Company issued an additional Promissory Note to a shareholder with greater than 5% ownership with a principal balance of $1,000,000. The note accrues interest at 6.25% per annum and matures in January 2026 and contained warrants further discussed below. The outstanding balance was $1,000,000 as of December 31, 2025, all of which was principal. The balance was converted to a convertible note in February 2026. The Company incurred $4,583 and $9,167 The promissory note contained warrants to purchase 214,229 shares of common stock at the exercise price of $0.24 or through a cashless exercise. The warrants were exercised for cash in February 2025. The warrants were allocated a relative fair value of $615,000 upon issuance, which was amortized over the life of the note. During the three months ended March 31, 2026, the Company recognized $51,286 of interest expense related to the accretion of the discount, with $0 remaining at the end of the period. |