| SCHEDULE OF LONG TERM DEBT |
SCHEDULE
OF LONG TERM DEBT
| |
|
June
30, 2026 |
|
|
December
31, 2025 |
|
| Revolving
Loan |
|
$ |
2,500,000 |
|
|
$ |
5,000,000 |
|
| Revolving
Loan – On January 2, 2026, the Company amended its revolving loan agreement and decreased the maximum balance from $6,000,000
to $5,000,000. The maturity date of the revolving loan is extended to March 31, 2027, and has an annual interest rate equal to the
prime rate less 0.25% and a floor of 6.50%. In March 2026, the Company received a subsequent extension of the revolving loan maturity
date to March 31, 2027, at which time the Revolving Loan shall convert to a Term Loan and extend to March 31, 2030. Debt covenants
of this loan require the Company to maintain a minimum debt service coverage ratio of at least 1.5 to 1 and is required to maintain
a $1,000,000 pledge deposit. At June 30, 2026, the interest rate on this loan was 6.5%. The Company was in compliance with the debt
covenants of this loan for the trailing twelve month period ended June 30, 2026, and it is reasonably possible it will remain in
compliance for the twelve months thereafter. |
|
$ |
2,500,000 |
|
|
$ |
5,000,000 |
|
| 2021 Promissory Note
– On June 17, 2021, the Company amended its loan agreement to reduce the principal amount with a financial institution for
10 years, annual interest rate of 3.5% for the first 5 years, and then floating at Wall Street Journal rate from years 6 to 10. The
loan is secured by the Company’s building, with a carrying value of $4.1 million, and matures on June 30, 2031. The note is
subject to a prepayment penalty. Debt covenants of this loan require the Company to maintain a minimum debt service coverage ratio
of at least 1.5 to 1. The Company was in compliance with the debt covenants of this loan for the trailing twelve month period ended
June 30, 2026, and it is reasonably possible it will remain in compliance for the twelve months thereafter. |
|
|
2,591,993 |
|
|
|
2,636,536 |
|
| February 2025 Convertible
Notes – On February 21, 2025, the Company issued convertible notes at a 10.0% discount and a principal balance of $3,300,000.
The notes had an interest rate of 5.0%, were paid in consecutive monthly installments beginning May 21, 2025 and matured on February
21, 2026. In the event of a default the Company could have been required to pay to the holders an amount equal to the principal outstanding,
plus any accrued interest through the date of payments, multiplied by 120%. The Company had the option to prepay the notes at any
time and the note holders have the option to convert the notes, in whole or in part, at any time. The Company elected the fair value
option to account for the convertible notes. This note was fully paid in February 2026. |
|
|
— |
|
|
|
691,010 |
|
| 2025
Term Loan – On June 10, 2025, the Company entered into a term loan agreement with a principal balance of $3,500,000.
The note has a floating rate of 0.50%
in excess of the Wall Street Journal Prime Rate and a floor of 6.50%,
and is paid in monthly installments starting July
1, 2025, and maturing June
30, 2028. As of June 30, 2026, the interest on this loan is 7.25%.
In the event of a default, the Company could be required to pay the lender the entire principal balance, plus any accrued and unpaid
interest immediately due and payable, without notice or demand. The note is secured by a lien on collateral. Collateral includes all
of the borrower’s rights, title, and interest in all assets, including but not limited to accounts, equipment, deposits,
intellectual property and books and records. Debt covenants of this loan requires the Company to maintain a minimum debt service
coverage ratio of at least 1.5
to 1. The Company was in compliance with debt covenants of this loan for the trailing twelve month period ended June 30,
2026, and it is reasonably possible it will remain in compliance for the twelve months thereafter. |
|
|
2,412,048 |
|
|
|
2,961,882 |
|
| October
2025 Convertible Notes – On October 24, 2025, the Company issued a convertible note at a 10.0%
discount and a principal balance of $2,200,000.
The notes has an interest rate of 5.0%
is payable in consecutive monthly installments beginning January
24, 2026 and will mature on October
24, 2026. In
the event of a default the Company could be required to pay to the holders an amount equal to the principal outstanding, plus any
accrued interest through the date of payments, multiplied by 120%. The Company has the option to prepay the notes at any time
and the note holders have the option to convert the notes, in whole or in part, at any time into shares of the Company’s Class
A common stock. During the three months ended June 30, 2026, holders elected to convert $577,500
of outstanding principal balance of the convertible note into shares of the Company’s Class A common stock. The Company
elected the fair value option to account for the convertible notes. |
|
|
307,782 |
|
|
|
2,115,856 |
|
| November
2025 Convertible Notes – On November 26, 2025, the Company issued a convertible note at a 10.0%
discount and a principal balance of $1,100,000.
The notes has an interest rate of 5.0%,
is payable in consecutive monthly installments beginning February 26, 2026 and will mature on November
26, 2026. In
the event of a default the Company could be required to pay to the holders an amount equal to the principal outstanding, plus any
accrued interest through the date of payments, multiplied by 120%. The Company has the option to prepay the notes at any time
and the note holders has the option to convert the notes, in whole or in part, at any time into shares of the Company’s Class
A common stock. During the three months ended June 30, 2026, holders elected to convert $288,750
of outstanding principal balance of the convertible note into shares of the Company’s Class A common stock. The Company
elected the fair value option to account for the convertible notes. |
|
|
260,717 |
|
|
|
1,035,323 |
|
| Total
debt |
|
|
8,072,540 |
|
|
|
14,440,607 |
|
| Less:
current portion of long-term debt |
|
|
1,353,296 |
|
|
|
1,305,880 |
|
| Less:
convertible notes at fair value |
|
|
568,499 |
|
|
|
3,842,189 |
|
| Total
long-term debt |
|
$ |
6,150,745 |
|
|
$ |
9,292,538 |
|
|