NOTES PAYABLE |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Debt Disclosure [Abstract] | |
| NOTES PAYABLE |
NOTE 6 – NOTES PAYABLE
Insurance Loans
The Company has several financing loans for general liability, directors’ and officers’ insurance and other insurance liabilities, which bear interest at varying percentages and require monthly payments. As of March 31, 2025 and December 31, 2024, the remaining balances of these loans was $25,573 and $50,483, respectively. For the three months ended March 31, 2025 and 2024, these insurance loans incurred approximately $967 and $1,388, respectively, of interest expense.
Gibraltar Loan and Security Agreement – Revolving Loan
On May 24, 2024, STCB and its subsidiaries entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Gibraltar Business Capital, LLC (“Gibraltar”), securing a $12.5 million revolving line of credit to reduce long-term debt and expand working capital. This facility includes a $1.5 million Permitted Overadvance Amount (as defined in the Gibraltar Loan Agreement), which decreases by $125,000 per month starting June 1, 2024. The loan matures on May 24, 2026, with a one-year automatic extension subject to certain conditions.
The Gibraltar Loan accrues interest at One Month Term SOFR plus the Applicable Margin (as defined in the Loan and Security Agreement), with Permitted Overadvance Amounts carrying an additional 2% interest. As of March 31, 2025, the interest rate was 10%, and total outstanding revolving loan balances were $3,649,559, with a net balance of $3,429,984 after discounts with interest expense on the loan of $131,418 for the three months ended March 31, 2025.
The Loan and Security Agreement includes standard financial covenants, including a minimum EBITDA requirement and limitations on indebtedness, liens, asset sales, and stock transactions. There are also customary default provisions, covering events such as nonpayment, covenant violations, insolvency, and material judgments. As of March 31, 2025, the Company had several events of default due to reporting deficiencies and failure to maintain minimum EBITDA financial covenants, though the Company had no payment defaults. Discussions between the Company and Gibraltar are ongoing as the parties explore options to reset financial covenants in line with the Company’s forecasts and to secure waivers of existing defaults.
CEO Notes
See Note 9 for loans to STCB from the Company’s CEO.
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