DEBT

6 Months Ended

Jun. 30, 2025

Debt Disclosure [Abstract]

DEBT

5. DEBT

Debentures. On December 31, 2024 we issued a $750,000 debenture subordinated to obligations to the Company’s general and secured creditors that calls for interest only at 8.25% payable quarterly in 2025, with monthly payments of $9,199 including principal and interest at 8.25% commencing on January 31, 2026 based on a ten year amortization schedule. A balloon payment of $451,012 is due in full on December 31, 2030.

In consideration of the lender providing the financing, the Company issued warrants which entitle the holder to purchase 62,500 shares of our common stock at $4.50 per share. The warrants have a life of 72 months. If the debenture is paid in full on or before December 31, 2029, the warrants will have a life of 60 months.

On March 1, 2025 we issued a $75,000 debenture subordinated to obligations to the Company’s general and secured creditors that calls for interest only at 8.25% payable quarterly in 2025, with monthly payments of $920 including principal and interest at 8.25% commencing on January 31, 2026 based on a ten year amortization schedule. A balloon payment of $45,707 is due in full on December 31, 2030.

In consideration of the lender providing the financing, the Company issued warrants which entitle the holder to purchase 6,250 shares of our common stock at $4.50 per share. The warrants have a life of 70 months. If the debenture is paid in full on or before December 31, 2029, the warrants will have a remaining life of 58 months.

The factors used to calculate the estimated value of the warrants and the resulting fair value, were as follows.

Stock price	$	2.75
Exercise price per share	$	4.50
Original term (months)		70
Volatility		116.58%
Annual rate of quarterly dividends		None
Risk free interest rate		4.38%

Applying these assumptions resulted in a relative fair value of $132,000, all of which was recorded as debt discount with a corresponding credit to common stock. The debt discount will be amortized as interest expense of $22,000 annually over the respective terms of the debt. 

Our minimum future principal payments on these subordinated debentures are as follows:

June 30, 2026	$	16,645
June 30, 2027		57,754
June 30, 2028		62,704
June 30, 2029		68,077
June 30, 2030		73,910
December 31, 2030		545,910
Total		825,000
Less debt issuance cost		(121,314	)
Net subordinated debenture payable		703,686
Less current portion		(16,645	)
Long term portion	$	687,041

Term Loan Payable. The term loan is secured by a first mortgage on our building, and is payable in 119 equal monthly installments of $7,453 from inception, including principal and interest at 2.95% based on a 360 day year, plus a final payment of $773,727 (excluding interest) on September 30, 2031.  Our minimum future principal payments on this term loan, by year, are as follows:

2025	$	27,876
2026		57,000
2027		58,704
2028		60,460
2029		62,268
2030 – 2031		887,210
Total		1,153,518
Less debt issuance cost		(13,440	)
Net term loan payable		1,140,078
Less current portion		(54,016	)
Long term portion	$	1,086,062