Notes Payable |
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| NOTES PAYABLE | NOTE 9 – NOTES PAYABLE
On February 05, 2025, the Company entered into a government purchase orders/receivables backed line of credit of $7,000,000 with a maturity date of August 5, 2026, with Legalist, Inc an investment firm specializing in alternative assets. The agreement requires the payments from the six Federal Contracts described in Note 13 – Concentration of Sales, to go directly to the lenders, with the Company allowed to draw on the credit line every week as needed for operations. Interest on the outstanding balance is accrued daily at the U.S. Prime Rate plus .0246%. The effective interest rate as of March 31, 2026, was 14.5%. Balance as of March 31, 2025, and December 31, 2025, were $4,123,550, and $3,994,097respectively. As an active line of credit, the balance is presented as current.
On July 7, 2022, the Company entered into a buyout agreement with shareholder Lillian Flores. The total buyout amount was $3,384,950 representing 45% of the calculated business value as of December 31, 2020. Following the initial payment of $686,990, the company agreed to make 4 equal installments of principal and interest of $739,508 each December 31, starting 2023. Interest is calculated at a fixed rate of 3.110% compounded semi-annually. The company accrued interest on December 31, 2022, of $49,035. Balance remains in the amount of $2,697,960. All interest due was paid December 28, 2023, resulting in a balance of $0 on December 31, 2023. The Company requested a deferral of the payment of principal due December 31, 2023, and received a deferral from Mrs. Flores. On January 22, 2024, the Company entered into an agreement with Lillian Flores regarding the deferral of the required shareholder buyout payment of $611,253 due December 31, 2023. The deferral of the principal payment was requested by the Company for the purpose of capital retention. The agreement allows for a $16,500 monthly principal and interest payment starting in January 2024 through June 2024. Monthly interest is calculated at $1,585, leaving $14,915 applied to the principal. The agreement requires the remaining deferred principal of $521,763 to be paid by the Company on or before June 30, 2024. On June 30, 2024, Lillian Flores agreed to continue the extension payments of $16,500 amortized at 5%, with the remaining amount due December 31, 2026. Balance due December 31, 2024, was $2,531,096. During 2025 the Company made various principal and interest payments when possible throughout the year. The balance due as of December 31, 2025, is $2,457,991, of which $72,333 is included in current portion of notes payable. Due to lack of operational funds to continue payments to Ms. Flores, all payments and interest accruals have been deferred indefinitely.
The following schedule details the loans active as of March 31, 2026, and December 31, 2025:
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