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| DEBT | NOTE 15 – DEBT
Reference is hereby made to the disclosures in the following sections, which are hereby incorporated by reference thereto:
NOTE 6 – ASSETS HELD FOR SALE Sale of 5511 Building
Payoff of Business Loan
On September 29, 2026, in connection with the closing of the sale of the 5511 Building, the Company repaid in full all amounts outstanding under the Business Loan that Surety Bank of DeLand, Florida (“Surety Bank”) made to the Company on December 14, 2023 (“Business Loan Payoff”). The net proceeds of the Business Loan had been used by Lifted to pay a portion of the purchase price of the 5511 Building. Prior to the Business Loan Payoff, the Business Loan was evidenced by a Business Loan Agreement and a promissory note, bore interest at a fixed rate of 10% per annum, was scheduled to mature in December 2028, and was secured by a first priority mortgage on the 5511 Building. The payoff amount was $841,110, consisting of all outstanding principal and accrued interest and a $9,100 prepayment penalty. The Business Loan Payoff was funded from the sale proceeds at closing. Upon payment, the Business Loan was satisfied in full and terminated, and Surety Bank’s first priority mortgage was released, and the Company had no bank debt outstanding.
Background
On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank (“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 the 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.
Prior to the WCL Payoff, the Board of Directors of the Company had authorized management of the Company to explore the sale of the 5511 Building, and, if the 5511 Building is sold, to apply the net proceeds of such sale, firstly to the full repayment of the Business Loan, and secondly to the partial repayment of the Working Capital Loan. Simultaneously with such authorization, the Board of Directors of the Company had authorized management of the Company to apply certain tax refunds expected to be received by the Company, plus certain cash on hand held by the Company, to the partial or full repayment of the Working Capital Loan. Pursuant to this authorization, during the third quarter ended September 30, 2025, the Working Capital Loan was paid down $592,050 using certain tax refunds received by the Company. 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 included 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.
Prior to the Business Loan Payoff, the Business Loan bore 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 matured on December 14, 2028.
Prior to the Business Loan Payoff, the Business Loan had been 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 contained late payment penalties.
Prior to the Business Loan Payoff, 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 September 30, 2026 and December 31, 2025:
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