| Loans and Other Liabilities [Text Block] |
NOTE 11
– LOANS AND OTHER LIABILITIES
Loan as of
September 30, 2026, and December 31, 2025:
| | |
(in thousands) | | |
(in thousands) | |
| | |
September 30, 2026
(Unaudited)
($) | | |
December 31, 2025
(Audited)
($) | |
| Description of Loans | |
Non-Current | | |
Current | | |
Total | | |
Non-Current | | |
Current | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Related-Party Loan (1) | |
| - | | |
| 34 | | |
| 34 | | |
| - | | |
| 176 | | |
| 176 | |
| Loan from Executive Officers | |
| - | | |
| 34 | | |
| 34 | | |
| - | | |
| 176 | | |
| 176 | |
| Non-Related Party Loan | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| FirstFire Global Opportunities Fund, LLC(2) | |
| - | | |
| 322 | | |
| 322 | | |
| | | |
| | | |
| | |
| Vanquish Funding Group Inc. (3) | |
| - | | |
| 247 | | |
| 247 | | |
| - | | |
| - | | |
| - | |
| SBA Economic Injury Disaster Loan(4) | |
| 128 | | |
| 4 | | |
| 132 | | |
| 131 | | |
| 4 | | |
| 135 | |
| ODK Capital, LLC (5) | |
| - | | |
| 134 | | |
| 134 | | |
| - | | |
| - | | |
| - | |
| Total non-related party loan | |
| 128 | | |
| 707 | | |
| 835 | | |
| 131 | | |
| 4 | | |
| 135 | |
| Total Loans | |
| 128 | | |
| 741 | | |
| 869 | | |
| 131 | | |
| 180 | | |
| 311 | |
| 1. | On
June 30, 2026, the Company entered into separate agreements with Mr. Ram Mukunda, Chief Executive Officer, and
Ms. Claudia Grimaldi, Vice-President & Chief Compliance Officer (Principal Financial Officer), to settle
amounts owed to them aggregating $1,154,210 in shares of common stock at $0.27 per share. The agreements were
approved in advance by the independent directors and the Audit Committee, with each officer recused. The
amounts consisted of (i) accrued bonus and compensation of $586,467 and (ii) loans, credit card advances and
accrued interest of $567,743. During the three months ended September 30, 2026, the Company settled the
accrued bonus and compensation by issuing 2,172,100 shares of common stock under the Company’s 2018
Omnibus Incentive Plan. As of September 30, 2026, the 2,102,753 shares for the loans, advances and accrued
interest had not been issued, and $567,743 was presented in stockholders’ equity as common stock
subscribed but not yet issued. When issued, these shares will be restricted securities issued in reliance on
Section 4(a)(2) of the Securities Act. See Note 17. |
| 2. | On
April 10, 2026, the Company entered into a Securities Purchase Agreement (the “FirstFire Purchase
Agreement”) with FirstFire Global Opportunities Fund, LLC (“FirstFire”), pursuant to which
the Company issued a promissory note (the “FirstFire Note”) with a principal amount of
approximately $346 thousand, maturing on April 16, 2027. The FirstFire Note was issued with an original issue
discount of approximately $39 thousand and debt issuance costs of approximately $5 thousand, resulting in net
proceeds of approximately $302 thousand. On June 18, 2026, the Company and FirstFire entered into Amendment #1
to the FirstFire Purchase Agreement and the FirstFire Note, which deemed the issue date of the FirstFire Note
to be April 14, 2026, and extended the maturity date, the monthly payment dates, and the prepayment periods by
six calendar days, resulting in a maturity date of April 16, 2027. Amendment #1 was filed as Exhibit 10.7 to
the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. |
The Company
determined that the conversion feature requires bifurcation as an embedded derivative under ASC 815-15. The
total debt discount of approximately $80 thousand, comprising the original issue discount, derivative
liability, and debt issuance costs, is being amortized to interest expense over the term of the FirstFire Note
using the effective interest method. For the period from issuance through September 30, 2026, amortization of
the debt discount was approximately $56 thousand. On the issuance date, the embedded derivative liability was
initially measured at approximately $36 thousand. As of September 30, 2026, the carrying amount of the
FirstFire Note was approximately $322 thousand, net of an unamortized debt discount of approximately $24
thousand, and the fair value of the related derivative liability was approximately $24 thousand, resulting in
a gain of approximately $12 thousand recognized in other income (expense), net. For more information, please
refer to Note 15, “Fair Value of Financial Instruments”.
The terms of
the FirstFire transaction, including the conversion provisions, beneficial ownership limitation, exchange cap,
Events of Default and other material provisions, are more fully described in the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on April 20, 2026.
| 3. | During
the nine months ended September 30, 2026, the Company executed two separate Securities Purchase Agreements
with Vanquish Funding Group Inc. and issued two separate promissory notes to VFG with aggregate principal of
approximately $591 thousand, maturing in February and March 2027, respectively, namely VFG-1 and VFG-2. The
VFG Notes were issued with an aggregate original issue discount of approximately $77 thousand and aggregate
debt issuance costs of approximately $44 thousand, resulting in net proceeds of approximately $470
thousand. |
The Company
determined that the conversion feature requires bifurcation as an embedded derivative under ASC 815-15. The
total aggregate debt discount of approximately $168 thousand, comprising the original issue discounts,
derivative liabilities, and debt issuance costs, is being amortized to interest expense over the term of the
VFG Notes using the effective interest method. For the period from issuance through September 30, 2026,
amortization of the debt discount was approximately $132 thousand, of which approximately $63 thousand was
recognized in the three months ended September 30, 2026. On the respective issuance dates, the embedded
derivative liabilities related to the VFG Notes were initially measured at an aggregate fair value of
approximately $47 thousand. During the three months ended September 30, 2026, the Company repaid approximately
$308 thousand of principal on the VFG Notes. As of September 30, 2026, the carrying amount of the VFG Notes
was approximately $247 thousand, net of an unamortized debt discount of approximately $36 thousand, and the
aggregate fair value of the related derivative liabilities was approximately $19 thousand, resulting in a gain
of approximately $28 thousand recognized in other income (expense), net. For more information, please refer to
Note 15, “Fair Value of Financial Instruments”.
The terms of
the VFG-1 transaction, including the conversion provisions, beneficial ownership limitation, exchange cap,
Events of Default and other material provisions, are more fully described in the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2026. The terms of the VFG-2
transaction are more fully described in the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 20, 2026.
| 4. | On
June 11, 2020, the Company received an Economic Injury Disaster Loan (“EIDL”) for approximately
$150 thousand at an annual interest rate of 3.75%. The Company must pay principal and interest payments of
$731 every month beginning September 5, 2021. The SBA will apply each installment payment first to pay
interest accrued to the day the SBA receives the payment and will then apply any remaining balance to reduce
the principal. All remaining principal and accrued interest is due and payable 30 years from the date of the
loan. For the nine months ended September 30, 2026, the interest expense and principal payment for the EIDL
were approximately $4 thousand and $3 thousand, respectively. |
| 5. | On
February 9, 2026, HH Processors, LLC, a subsidiary of the Company, entered into a loan agreement with ODK
Capital LLC (“OnDeck”), pursuant to which the Company received net proceeds of approximately $214
thousand in financing (the “OnDeck Loan”). The OnDeck Loan bears an annual percentage rate of
31.9% and is repayable in accordance with the terms and conditions set forth in the loan agreement, including
scheduled periodic payments of approximately $3 thousand per week. The OnDeck Loan matures in August 2027. The
proceeds are being used for general working capital and corporate purposes. For the nine months ended
September 30, 2026, the interest expense and principal payment for OnDeck were approximately $32 thousand and
$81 thousand, respectively. |
| 6. | The
Company maintains a revolving working capital credit facility with O-Bank that provides for maximum aggregate
borrowings of up to $12 million. Borrowings are limited to $1 million per month and are subject to the
applicable terms and conditions of the facility. As of September 30, 2026, no amounts were outstanding under
the facility. The facility expires on May 31, 2027. The Company expects to seek renewal before
expiration; however, there can be no assurance that the facility will be renewed, that future borrowings will
be available when required, or that any renewal will be on similar terms. |
|