NOTE 5 — DEBT

Total debt of the Company was as follows as of June 30, 2026 and December 31, 2025:

The table below details the maturity dates of the principal amounts for the Company’s debt as of June 30, 2026:

Convertible Notes Payable

As of June 30, 2026, the Company had thirty-one convertible notes payable outstanding. The convertible notes payable bear interest at a rate of 10% per annum, with initial maturity dates ranging between the second anniversary and the sixth anniversary of their respective issuances.

The balance of each convertible notes payable and any accrued interest may be converted at the noteholder’s option at any time at the following conversion prices:

As of June 30, 2026, the principal balance of $1,200,000 and $6,550,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on the Company’s condensed consolidated balance sheet under the caption convertible notes payable. As of December 31, 2025, the principal balance of $1,250,000 and $6,460,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on the Company’s condensed consolidated balance sheet under the caption convertible notes payable.

During the six months ended June 30, 2026, four holders of five convertible notes payable with an aggregate principal balance of $810,000 converted the full principal amount of each of the convertible promissory notes payable into an aggregate of 795,839 shares of the Company’s common stock, pursuant to the provisions of their respective convertible notes payable. During the six months ended June 30, 2026, the Company entered into five subscription agreements (the “Subscription Agreements”) with five investors for five convertible promissory notes (each a “Note”) in the aggregate principal amount of $850,000 and received cash proceeds of $850,000. The Notes bear interest at 10% per annum and each Note matures on either the fourth or fifth anniversary of their respective issuance dates. The noteholders may convert all or part of the principal balance of the Notes and any accrued interest thereon at any time before the maturity date into shares of the Company’s common stock at a purchase price ranging between $1.12 and $1.60 per share. On August 11, 2026, the Company entered into a Subscription Agreement with an investor and received cash proceeds of $100,000. The Note bears interest at 10% per annum, matures on August 11, 2030 and the principal and any accrued interest may be converted by the noteholder at a conversion price of $1.09 anytime before the Notes maturity date.

The Company recorded interest expense related to these convertible notes payable of $188,333 and $165,251 during the three months ended June 30, 2026 and 2025, respectively, and $379,469 and $301,251, respectively, during the six months ended June 30, 2026 and 2025. In addition, the Company made cash interest payments amounting to $379,248 and $286,212, respectively, during the six months ended June 30, 2026 and 2025, related to the convertible notes payable.

Convertible Note Payable at Fair Value

The Company has one convertible note payable outstanding with a principal amount of $500,000 as of June 30, 2026, for which it elected the fair value option. As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, the Company records the fair value of the convertible note payable with any changes in the fair value recorded in the condensed consolidated statements of operations.

The Company had a balance of $250,000 and $270,000 in noncurrent liabilities as of June 30, 2026 and December 31, 2025, respectively, on its condensed consolidated balance sheets related to the convertible note payable measured at fair value. See Note 7 – Fair Value Measurements for further discussion on the valuation of this convertible note payable.

The Company recorded a gain in fair value of $10,000 and $50,000 for the three months ended June 30, 2026 and 2025, respectively, and a gain of $20,000 and $70,000 for the six months ended June 30, 2026 and 2025 on its condensed consolidated statements of operations related to this convertible note payable at fair value.

The convertible note payable at fair value bears interest at a rate of 8% per annum. The Company recorded interest expense related to this convertible note payable at fair value of $9,863 for each of the three months ended June 30, 2026 and 2025 and $19,726 for each of the six months ended June 30, 2026 and 2025. In addition, the Company made cash interest payments amounting to $19,726 for both the six months ended June 30, 2026 and 2025, related to the convertible note payable at fair value.

Nonconvertible Promissory Notes

As of June 30, 2026, the Company had eleven outstanding unsecured nonconvertible promissory notes in the aggregate amount of $5,080,000, which bear interest at a rate of 10% per annum and mature between November 2026 and October 2030.

As of June 30, 2026 and December 31, 2025, the Company had a balance of $900,000 and $500,000, respectively, recorded as current liabilities and $4,180,000 and $4,580,000, respectively, in noncurrent liabilities on its condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

The Company recorded interest expense related to these nonconvertible promissory notes of $127,000 and $104,667 for the three months ended June 30, 2026 and 2025, respectively, and $254,000 and $203,750 for the six months ended June 30, 2026 and 2025, respectively. The Company made interest payments of $252,778 and $200,250 during the six months ended June 30, 2026 and 2025, respectively, related to the nonconvertible promissory notes.

Nonconvertible Unsecured Promissory Note - Socialyte Promissory Note

In connection with the purchase agreement for the acquisition of Socialyte (“Socialyte Purchase Agreement”), the Company entered into a promissory note with the sellers of Socialyte (“the Socialyte Promissory Note”) amounting to $3,000,000. The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1,500,000 on June 30, 2023 and $1,500,000 on September 30, 2023. The Socialyte Promissory Note carries an interest of 4% per annum, which accrues monthly, and all accrued interest was to be due and payable on September 30, 2023.

The Socialyte Purchase Agreement allows the Company to offset a working capital deficit against the Socialyte Promissory Note. As such, the Company deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte. The Company has filed a lawsuit against the seller of Socialyte and certain of its principals related to the Socialyte Purchase Agreement. See Note 12.

The Company recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended June 30, 2026 and 2025, and $60,000 for the six months ended June 30, 2026 and 2025. No interest payments were made during the three or six months ended June 30, 2026 and 2025, related to the Socialyte Promissory Note.

BankUnited Term Loans

On September 29, 2023, the Company entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which an existing term loan with BankProv was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $5,800,000 secured term loan (“First BKU Term Loan”), (ii) and $750,000 of a secured revolving line of credit (“BKU Line of Credit”) and (iii) $400,000 Commercial Card (“BKU Commercial Card”). The First BKU Term Loan carries a 1.0% origination fee and matures in September 2028, the BKU Line of Credit carries an initial origination fee of 0.5% and a 0.25% fee on each annual anniversary and matures in September 2026; the BKU Commercial Card does not have any initial or annual fee and matures in September 2026. The First BKU Term Loan has a declining prepayment penalty equal to 5% in year one, 4% in year two, 3% in year three, 2% in year four and 1% in year five of the outstanding balance. The BKU Line of Credit and BKU Commercial Card can be repaid without any prepayment penalty.

On December 6, 2024, the Company entered into a second Bank United Loan Agreement (“Second BKU Term Loan”) for $2.0 million to finance the acquisition of Elle. The Second BKU Term Loan carries a 1.0% origination fee and matures in December 2027. Similar to the First BKU Term Loan, the Second BKU Term Loan has a declining prepayment penalty equal to 3% in year one, 2% in year two and 1% in year three of the outstanding balance. (The First BKU Term Loan, Second BKU Term Loan, BKU Line of Credit and BKU Commercial Card are collectively referred to as the “Bank United Credit Facility”).

Interest accrues at 8.10% fixed rate per annum on the First BKU Term Loan and 7.10% fixed rate per annum on the Second BKU Term Loan. Principal and interest are payable on a monthly basis based on a 5-year amortization for the First BKU Term Loan and 3-year amortization for the Second BKU Term Loan. Interest on the BKU Line of credit is payable on a monthly basis, with all principal due at maturity. The BKU Commercial Card payment is due in full at the end of each bi-weekly billing cycle. During the six months ended June 30, 2026 and the year ended December 31, 2025, the Company did not use the BKU Commercial Card. During each of the three months ended June 30, 2026 and 2025, the Company made payments in the amount of $354,621, inclusive of $64,145 and $87,197, respectively, of interest related to the First BKU Term Loan. During each of the six months ended June 30, 2026 and 2025, the Company made payments in the amount of $709,241, inclusive of $132,770 and $177,919, respectively, of interest related to the First BKU Term Loan. During each of the three months ended June 30, 2026 and 2025, the Company made payments in the amount of $185,995, inclusive of $21,332 and $23,187, respectively, of interest related to the Second BKU Term Loan. During each of the six months ended June 30, 2026 and 2025, the Company made payments in amount of $371,991, inclusive of $45,158 and $67,937, respectively, of interest related to the Second BKU Term Loan.

Interest on the BKU Line of Credit is variable based on the Lender’s Prime Rate. During the three months ended June 30, 2026 and 2025, the Company recorded interest expense and made payments of $6,900 and $7,667, respectively, and $13,678 and $15,217 for the six months ended June 30, 2026 and 2025, respectively, related to the BKU Line of Credit.

As of June 30, 2026, the Company had a balance of $1,890,056 classified as current liabilities and $2,016,967 classified as noncurrent liabilities, net of $51,881 of debt issuance costs, in its condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of December 31, 2025, the Company had a balance of $1,813,760 classified as current liabilities and $2,976,930 classified as noncurrent liabilities, net of $71,518 of debt issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of June 30, 2026 and December 31, 2025, the Company had a balance of $400,000 of principal outstanding under the BKU Line of Credit.

Amortization of debt origination costs under the Bank United Credit Facility is included as a component of interest expense in the condensed consolidated statements of operations and amounted to approximately $7,012 for the three months ended June 30, 2026 and 2025, and $19,636 and $14,024 for the six months ended June 30, 2026 and 2025, respectively.

The Bank United Credit Facility contains financial covenants tested semi-annually, starting on June 30, 2024, on a trailing twelve-month basis that require the Company to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires the Company to hold a cash balance at BankUnited with a daily minimum deposit balance of $2,000,000. As of June 30, 2026, the Company is in compliance with the debt covenants.

FVP Loan

On May 7, 2026, two of the Company’s wholly-owned subsidiaries, Shore Fire and The Door (collectively, the “Borrowers”), executed a loan agreement with certain Lenders and FVP Servicing, LLC (“FVP”), as agent for the Lenders providing for (i) a term loan in the amount of $2,000,000, (ii) a delayed draw term loan in the amount of $2,000,000 that, subject to certain conditions, will become available on November 7, 2026 and (ii) a second delayed draw term loan in the amount of $1,000,000 that, subject to certain conditions, will become available on May 7, 2027 (the “Loans”). The Loans bear and will bear interest at 12% per annum from the date they are made and will have a maturity date of May 7, 2029. The Company executed a guaranty in favor of FVP in connection with the loan agreement. In addition, the Borrowers entered into a security agreement pursuant to which they granted FVP and the Lenders a security interest in substantially all of their assets as collateral for the loan obligations and the Company entered into a pledge and security agreement granting FVP and the Lenders a security interest in the equity of the Borrowers. Proceeds from the Loans will be for general working capital purposes.

During the three and six months ended June 30, 2026, the Company drew $2,000,000 under the FVP loan facility (the “FVP Loan”), and incurred debt issuance, loan origination fees and debt service reserve of $813,472 recorded as net of the term loans, noncurrent portion on the condensed consolidated balance sheet. As of June 30, 2026, the Company had an aggregate principal balance of $1,229,021 related to the FVP Loan, net of debt issuance costs, loan origination fees and debt service reserve. For the three and six months ended June 30, 2026, the Company amortized as interest expense on its consolidated statement of operations, debt origination costs, loan origination fees and interest in the amount of $42,493 against the amounts retained on the date of the FVP Loan.

The FVP loans facility contains financial covenants tested annually, starting on December 31, 2026, on a trailing twelve-month basis that require the Company to maintain a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, FVP credit facility contains a liquidity covenant that requires the Company to hold an unrestricted cash balance with daily minimum deposit balance of $500,000. As of June 30, 2026, the Company is in compliance with the debt covenant.