v3.26.1
NOTES AND LOANS PAYABLE
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
NOTES AND LOANS PAYABLE

 

7. NOTES AND LOANS PAYABLE

 

Notes payable and line of credit at June 30, 2026 and December 31, 2025 are summarized as follows:

      
   June 30, 2026  December 31, 2025
Notes payable – unrelated parties  $21,291,781   $17,474,455 
Notes payable – related parties   1,435,703    1,085,703 
Less current portion   (22,240,369)   (18,421,385)
Long-term portion  $487,115   $138,773 

 

Long-term debt matures as follows:

   
   Amount
2026 (remainder of year)  $22,238,005 
2027   33,895 
2028   296,394 
2029   33,895 
2030   4,728 
Thereafter   120,567 
Total  $22,727,484 

 

Promissory Note – Settlement Agreement

 

In June 2024, the Company issued a settlement promissory note in the amount of $535,000 in connection with the cancellation of certain preferred stock and convertible notes, as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The note did not bear interest and required fixed principal payments based on the timing and amount of capital raised in any offerings. During the six months ended June 30, 2026, the Company paid $110,000 toward the outstanding principal balance. At June 30, 2026 and December 31, 2025, the remaining principal balance was $0 and $110,000, respectively.

 

Loans and Notes Payable

 

On March 12, 2009, the Company issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at June 30, 2026 and December 31, 2025. The accrued interest of the debenture was $10,842 and $10,188 at June 30, 2026 and December 31, 2025, respectively. The Company assigned all its receivables from consumer activations of the rewards program as collateral on this debenture.

 

Loans and Notes Payable – Related Parties

 

As of June 30, 2026 and December 31, 2025, the outstanding principal on the related party notes was $1,435,703 and $1,085,703, respectively. Accrued interest outstanding on the related party notes was $52,073 and $1,636 at June 30, 2026 and December 31, 2025, respectively. See also Note 5. Related Party Transactions.

 

Small Business Administration (“SBA”) Loans

 

On June 2, 2020, the Company obtained an SBA loan in the principal amount of $150,000 with an interest rate of 3.75% and a maturity date of June 2, 2050. The principal balance and accrued interest at June 30, 2026 was $141,843 and $0, respectively, and the principal balance and accrued interest at December 31, 2025 was $143,558 and $0, respectively.

 

Line of Credit

 

The Company maintains a revolving purchase and security agreement with DML HC Series, LLC (“DML”), which is accounted for as a secured borrowing. Under the facility, eligible accounts receivable are pledged as collateral, and advances of up to 70% of eligible receivables may be requested, subject to a maximum advance amount of $23,000,000. The related accounts receivable remain recorded as assets on the Company’s balance sheet, and the amounts drawn are recorded as a liability under ‘Line of Credit’ until repaid. The Company is required to repurchase or replace certain ineligible or uncollected receivables. Collections on pledged receivables are remitted directly to the lender and applied against outstanding borrowings. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding. The facility includes customary recourse, repurchase provisions, and covenants, and matures on September 28, 2028.

 

Under the terms of the facility, collections from these receivables are used to repay advances outstanding, which are recognized as secured borrowings totaling $21,138,949 and $17,209,908 as of June 30, 2026 and December 31, 2025, respectively. The unused line of credit balance as of June 30, 2026 and December 31, 2025 was $1,861,051 and $5,790,092, respectively. The accrued interest related to the line of credit was $653,551 and $673,267 as of June 30, 2026 and December 31, 2025, respectively.