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| DEBT | NOTE 15 – DEBT
On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank, of DeLand, Florida (“Lender”).
The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest (“Working Capital Loan”), and (2) a $910,000 loan at 10% fixed annual interest (the “Business Loan”), the net proceeds of which were used by Lifted to pay a portion of the $1,375,000 purchase price of Lifted’s main operations building located at 5511 95th Avenue, Kenosha, Wisconsin (“5511 Building”). Prior to the WCL Payoff, the two loans had been cross collateralized by a first lien mortgage on the 5511 Building, and by a first lien security interest in all of the other assets owned by LIFD and Lifted, in favor of Surety Bank.
On November 20, 2025, Borrower paid off the principal balance and accrued interest on the Working Capital Loan, which totaled $1,411,125, with no prepayment penalty (“WCL Payoff”). Following the WCL Payoff, Lender also agreed to immediately waive the covenants of the Business Loan Agreement regarding maintaining a minimum 1.50x debt service coverage ratio, and a $1,000,000 minimum deposit account balance (“Loan Term Changes”).
The Working Capital Loan had been evidenced by a credit agreement, promissory note, security agreement, collateral assignment agreement, and pledge agreement. The Working Capital Loan was to mature on December 14, 2028, and was subject to prepayment penalties declining from 3% to 1% over three years and includes restrictive covenants prohibiting, without lender consent, additional liens, changes in Lifted’s ownership, mergers, stock buybacks, and other actions. The Working Capital Loan had been secured by all of the Company’s business personal property and intellectual property and included a cross-default with the Business Loan.
The Business Loan bears interest at a fixed annual rate of 10%, and prior to the Loan Term Changes, required a minimum 1.50x debt service coverage ratio (waived for 2024), as well as maintaining a $1,000,000 minimum deposit balance with the lender for the life of the Business Loan, which matures on December 14, 2028.
As of June 30, 2026 and December 31, 2025, the Business Loan is secured by a first priority mortgage on the 5511 Building, along with a first priority security interest on all furniture, equipment, inventory, intangibles and fixtures, and other collateral, and also contains late payment penalties.
Prior to the WCL Payoff and Loan Term Changes, any default under these agreements could have resulted in the lender seizing the pledged collateral, including equity in key subsidiaries, intellectual property, and real estate, which could have a catastrophic impact on the Company.
The following presents the Business Loan in the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025:
The following represents aggregate payments due on the Business Loan as of June 30, 2026:
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