| Related Party Notes and Lines of Credit |
(6)
Related Party Notes and Lines of Credit
Notes
and lines of credit consist of the following:
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As
of June 30, 2026 |
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As
of December 31, 2025 |
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Rate at June 30,
2026 |
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Total
Borrowing Capacity |
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Outstanding
Borrowed Balance |
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Total
Borrowing Capacity |
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Outstanding
Borrowed Balance |
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| Libertyville
Bank & Trust (1) |
|
7.75 |
% |
|
30 |
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|
— |
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|
$ |
30 |
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|
$ |
— |
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| Libertyville
Bank & Trust (2) |
|
7.75 |
% |
|
500 |
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|
|
— |
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|
500 |
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— |
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| Beachcorp,
LLC (3) |
|
7.50 |
% |
|
9,504 |
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|
3,787 |
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|
6,236 |
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|
|
4,767 |
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| Beachcorp,
LLC (4) |
|
7.50 |
% |
|
10,000 |
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|
9,500 |
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10,000 |
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|
9,500 |
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| Strandler,
LLC (5) |
|
7.50 |
% |
|
1,000 |
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1,000 |
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1,000 |
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|
1,000 |
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| 1) | Since
July 2014, we have maintained a bank-issued letter of credit for up to $30 in borrowings,
with interest at the prime rate plus 1%, to support our obligations under our Romeoville,
Illinois facility lease agreement. No borrowings have been incurred under this promissory
note. It is our intention to renew this note annually. Because there were no amounts
outstanding on the note at any time during 2026 or 2025, we have recorded no related
liability on our condensed consolidated balance sheet. |
| 2) | On
December 21, 2021, the existing credit agreement with Libertyville was converted for
use to support our obligations under our newly leased manufacturing and warehouse space
in Bolingbrook, Illinois. Interest on drawn balances will be at the prime rate plus 1%.
This credit agreement has a maturity of December 22, 2026. We expect to renew this agreement
annually, as the lease requires. This credit agreement is secured by all the unencumbered
assets of the Company and has superior collateral rights to those credit facilities with
Beachcorp, LLC and Strandler, LLC. |
| 3) | On
January 28, 2022, the Company entered into an Amended and Restated Business Loan Agreement
(the “A&R Loan Agreement”), which amends and restates the Master Agreement
between the Company and Beachcorp, LLC, and a new promissory note in order to evidence
the A/R Revolver facility, including an amendment to expand the limit on the A/R Revolver
Facility from $6,000 to $8,000, reduce the interest rate to the prime rate plus 0.75%,
and extend the maturity of the A/R Revolver Facility to March 31, 2024. On March 1, 2024,
the Company entered into a Second Amendment to the Amended and Restated Business Loan
Agreement extending the maturity of the A/R Revolver Facility to October 1, 2025. On
May 27, 2025, the Company entered into a Third Amendment to the Amended and Restated
Business Loan Agreement to expand the limit on the A/R Revolver Facility from $8,000
to $12,000, and extend its maturity to April 30, 2027. |
| 4) | On
January 28, 2022, the Company entered into the A&R Loan Agreement and a new revolving loan agreement (“Inventory
Facility”) with Beachcorp, LLC, and a new promissory note in order to evidence the Inventory Facility. The maximum borrowing
amount under the Inventory Facility was $4,000,
with a borrowing base consisting of up to 50%
of the value of qualified inventory of the Company. The interest rate for the Inventory Revolver is at the prime
rate plus 0.75%,
and it was set to mature on March
31, 2024. On November 13, 2023, the Company entered into a Replacement Promissory Note with Beachcorp, LLC replacing the
Inventory Facility promissory note executed on January 28, 2022. The maximum borrowing amount under the replacement Inventory
Facility was increased to $5,200,
with a borrowing base consisting of up to 55%
of the value of qualified inventory of the Company. The interest rate for the replacement Inventory Revolver remains at the prime
rate plus 0.75%.
On March 1, 2024, the company entered into a Second Amendment to the Business Loan Agreement extending the maturity of the Inventory
Revolver Facility to October
1, 2025. On May 27, 2025, the Company entered into a Third Amendment to the Business Loan Agreement to expand the limit on
the Inventory Revolver Facility from $5,200
to $10,000,
and extend its maturity to April
30, 2027. As described below in Note 11 (Restatement of Previously Issued Consolidated Financial Statements), the Company
recently identified errors in its historical accounting for labor and overhead included in inventories. As a result,
inventories were overstated in past borrowing base calculations under the Inventory Facility. Effective August 17, 2026,
Beachcorp, LLC provided a waiver of all breaches and defaults under the Inventory Facility as a result of the foregoing up to a
maximum of $3,000
in overstated inventory. The Company does not expect there to be any prospective impact on the compliance or availability of the Inventory
Facility. |
| 5) | On
January 28, 2022, the Company entered into an additional Business Loan Agreement (the
“New Term Loan Agreement”) with Strandler, LLC, which effectively transferred
or assigned the Term Loan to Strandler, LLC from Beachcorp, LLC. Interest on the New
Term Loan is at the prime rate plus 0.75%. Strandler, LLC is also an affiliate of Bradford
T. Whitmore. On March 1, 2024, the company entered into a Second Amendment to the Business
Loan Agreement extending the maturity of the Term Maturity Note to October 1, 2025. On
May 27, 2025, the Company entered into a Third Amendment to the Business Loan Agreement
extending the maturity of the Term Maturity Note to April 30, 2027. |
The
Company classifies the line of credit – accounts receivable as current because we are required to pay back the borrowings
as cash is received from our customers. The Company’s remaining debt is presented within the Consolidated Balance Sheet
as of June 30, 2026, and December 31, 2025, in accordance with the maturity dates in the financing agreements. The Company’s
loan agreements with Strandler, LLC and Beachcorp, LLC currently are set to expire on April 30, 2027, which could become an operating
risk if we are not able to refinance or extend the maturity dates. It is the Company’s intention to refinance or extend
the maturity dates for the debt held with Strandler, LLC and Beachcorp, LL
Beachcorp,
LLC and Strandler, LLC are affiliates of Mr. Bradford T. Whitmore, who beneficially owns a majority of the Company’s common
stock and is the brother of Ms. R. Janet Whitmore, a director of the Company and the chair of the Company’s board of directors.
The A/R Revolver Facility, the Inventory Facility and the New Term Loan are all secured by all the unencumbered assets of the
Company and subordinated to the Company’s credit facility with Libertyville Bank & Trust.
Related
party interest expense consists of the following:
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Three
months ended June 30, |
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Six
months ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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| Interest expense, related parties |
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$ |
279 |
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$ |
282 |
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$ |
542 |
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$ |
458 |
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Accrued
interest consists of the following:
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As
of |
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June
30, 2026 |
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December
31, 2025 |
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| Accrued interest
expense, related parties |
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$ |
90 |
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$ |
81 |
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Outstanding
balances associated with related parties are as follows:
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June
30, 2026 |
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December
31, 2025 |
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| Beachcorp,
LLC |
|
$ |
13,287 |
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$ |
14,267 |
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| Strandler,
LLC |
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|
1,000 |
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|
1,000 |
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