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

NOTE 9. DEBT OBLIGATIONS

 

Debt obligations were as follows at June 30, 2026 and December 31, 2025:

 

  

June 30,

2026

   December 31, 2025 
Economic injury disaster loan (EIDL)  $139,329   $141,083 
Unsecured Promissory note   500,000    525,000 
2025 Secured Notes   —    1,070,000 
Total gross principal   639,329    1,736,083 
Unamortized debt discount   —    (890,716)
Debt obligations   639,329    845,367 
Less: current maturities of debt obligations   503,609    707,826 
           
Debt obligations, long-term  $135,720   $137,541 

 

 

Future principal payments on debt obligations as of June 30, 2026 are as follows:

 

   Gross Principal   Unamortized
Discount		   Net Carrying
Value		 
2026 (July 1, 2026 to December 31, 2026)  $501,788   $—   $501,788 
2027   3,677    —    3,677 
2028   3,817    —    3,817 
2029   3,963    —    3,963 
2030 and thereafter   126,084    —    126,084 
Total  $639,329   $—   $639,329 

 

Current maturities of debt obligations of $503,609 represent principal due within twelve months of June 30, 2026, comprising $501,788 due during the remainder of 2026 and $1,821 due during the first six months of 2027.

 

2020 Small Business Administration Notes.

 

On May 12, 2020, the Company received $150,000 in loan funding from the SBA under the Economic Injury Disaster Loan (“EIDL”) program administered by the SBA, which program was expanded pursuant to the recently enacted CARES Act. The EIDL is evidenced by a secured promissory note, dated May 8, 2020, in the original principal amount of $150,000 with the SBA, the lender.

 

Under the terms of the note issued under the EIDL program, interest accrues on the outstanding principal at the rate of 3.75% per annum. The term of such note is thirty years, though it may be payable sooner upon an event of default under such note. Monthly principal and interest payments began in November 2022, after being deferred for thirty months after the date of disbursement and total $731 per month thereafter. Such note may be prepaid in part or in full, at any time, without penalty. The Company granted the SBA a continuing interest in and to any and all collateral, including but not limited to tangible and intangible personal property. The outstanding balance of the EIDL note was $139,329 as of June 30, 2026 and $141,083 as of December 31, 2025.

 

Unsecured Promissory Note

 

On February 1, 2025, the Company entered into a $600,000 unsecured promissory note with a third party in connection with its Entertainment business, bearing interest at 10.0% per annum, compounded monthly. The outstanding principal balance was $500,000 as of June 30, 2026 and $525,000 as of December 31, 2025. During the three and six months ended June 30, 2026, the Company made principal payments of $15,000 and $25,000, respectively.

 

2025 Senior Secured Convertible Note and Committed Equity Financing

 

During September and December 2025, the Company issued senior secured convertible notes (the “2025 Secured Notes”) with an aggregate original principal amount of $1,070,000, together with detachable common stock purchase warrants. As of December 31, 2025, the outstanding principal balance was $1,070,000 and the unamortized debt discount was $(890,716), for a net carrying balance of $179,284, presented within current debt obligations (see Note 9). Because the conversion price was variable, the conversion feature was bifurcated and accounted for as a derivative liability at fair value.

 

During the three months ended March 31, 2026, the holders converted the entire $1,070,000 outstanding principal balance into 111,608 shares of common stock in accordance with the conversion terms of the notes. In connection with the conversions, the remaining unamortized debt discount of $854,827 was eliminated against additional paid-in capital and the bifurcated conversion feature derivative liability, with an aggregate fair value of $1,142,191 at the dates of conversion, was reclassified to additional paid-in capital; no cash consideration was exchanged. No balance remained outstanding under the 2025 Secured Notes as of June 30, 2026. See Note 15, Common Stock Purchase Warrants, regarding the related detachable warrants, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 for additional information regarding the terms of the 2025 Secured Notes and the conversions.