v3.26.1
DEBT
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
DEBT

NOTE 11 – DEBT

 

Line of Credit

 

On January 31, 2024, we entered into a Loan and Security Agreement (the “2024 Loan and Security Agreement”) with Aion, pursuant to which we may borrow up to $3,500,000. The amount available for borrowing at any one time was limited to 80% of our eligible accounts receivable. The 2024 Loan and Security Agreement had an interest rate of 19.25% per annum (based on a 360-day year), payable on the first business day of each month following the accrual thereof. The 2024 Loan and Security Agreement, together with accrued and unpaid interest thereon, was due on January 30, 2025 (the “Maturity Date”).

 

On April 14, 2025, we entered into a Loan and Security Agreement (the “2025 Loan and Security Agreement”) with Aion to replace the 2024 Loan and Security Agreement, pursuant to which we may borrow up to $3,500,000. The amount available for borrowing at any one time was limited to 85% of our eligible accounts receivable. The 2025 Loan and Security Agreement had an interest rate of 18.00% per annum (based on a 360-day year), payable on the first business day of each month following the accrual thereof. The 2025 Loan and Security Agreement, together with accrued and unpaid interest thereon, was due on April 14, 2026 (the “Maturity Date”). The 2025 Loan and Security Agreement was secured by our assets and provided for a default interest rate of 29.25% per annum following an event of default.

 

 

On May 15, 2026, we entered into a Loan and Security Agreement (the “2026 Loan and Security Agreement”) with Aion to replace the 2025 Loan and Security Agreement on substantially the same terms as the 2025 Loan and Security Agreement. The 2026 Loan and Security Agreement, together with accrued and unpaid interest thereon, is due on May 15, 2027 (the “Maturity Date”). Upon the occurrence of an “Event of Default” (as defined in the 2026 Loan Security Agreement and including the failure to make required payments when due after specified grace periods, certain breaches and certain specified insolvency events), Aion would have the right to accelerate payments due, and increase the interest rate to 26% per annum. The 2026 Loan and Security Agreement is secured by our assets.

 

In relation to the Loan and Security Agreements, we recorded interest expense of $80,033 and $72,371 for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, we recorded interest expense of $149,617 and $158,847, respectively. Accrued interest payable as of June 30, 2026 and December 31, 2025 was $1,000 and $1,086, respectively. As of June 30, 2026 and December 31, 2025, the Loan and Security Agreements outstanding balance was $1,995,941 and $2,172,667, respectively.

 

Loans Payable

 

As of June 30, 2026 and December 31, 2025, loans payable were comprised of the following:

 

   

Effective

Interest Rates

   Maturities     June 30, 2026    

December 31, 2025

  
                       
B. Riley   - %   2027     $ 1,711,325     $ -  
Aion   19.55 %   2026 - 2027       350,000       -  
Other   4.75% to 6.00 %   2026 - 2027       80,045       87,588  
Less: debt discount                 (5,250 )     -  
Less: current portion                 (2,136,120 )     (83,983 )
Loans payable, net of current portion               $ -     $ 3,605  

 

On June 5, 2026, we entered into a term loan with Aion pursuant to which we borrowed $350,000. The term loan bears interest at 16.50% per annum and is repayable in 12 monthly installments of $31,839. We incurred debt issuance costs of $5,250 in connection with the term loan. As of June 30, 2026, the outstanding principal balance was $350,000. The interest expense and amortization of debt issuance costs for the three and six months ended June 30, 2026 was immaterial.

 

As discussed in Note 8, on April 1, 2026, B. Riley delivered a conversion notice for the remaining 1,778 shares of Series B Preferred Stock. Because the notice was delivered at a time when the volume-weighted average price of our Common Stock was below the minimum conversion price of $0.40 per share for ten consecutive trading days, we are obligated to redeem the remaining Series B Preferred Stock and make payments beginning May 1, 2026 equal to 105% of the $1,778,000 stated value, or $1,866,900. As of June 30, 2026, the remaining balance due was $1,711,325.

 

At June 30, 2026, the principal payments due under the above loans payable and line of credit were as follows:

 

         
2026 (remainder)   $ 1,106,680  
2027     3,030,631  
Total future principal payments     4,137,311  
Less: debt discount     (5,250 )
Less: current portion of debt     (4,132,061 )
Debt, net of current portion   $ -