NOTES PAYABLE |
9 Months Ended |
|---|---|
Sep. 30, 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 September 30, 2025 and December 31, 2024, the remaining balances of these loans was $254,620 and $50,483, respectively. For the three and nine months ended September 30, 2025, these insurance loans incurred $2,303 and $6,988, respectively, of interest expense; for the three and nine months ended September 30, 2024, these insurance loans incurred $982 and $5,754, 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 (the “Gibraltar Loan”) 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 September 30, 2025, the interest rate was 12.28%, and total outstanding revolving loan balances were $4,282,214, with a net balance of $4,156,743 after discounts with interest expense on the loan of $155,243 and $432,651 for the three and nine months ended September 30, 2025, respectively, and with interest expense on the loan of $192,041 and $254,689 for the three and nine months ended September 30, 2024, respectively.
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 September 30, 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.
The Company and its lender entered into an amendment and waiver to the Loan and Security Agreement, waiving (i) specified defaults therein, (ii) allowing additional permitted liens relating to the Company’s credit cards and credit card processing services as set forth therein, and (iii) adjusting certain financial and reporting covenants. Additionally, the Company and its lender entered into the Forbearance Agreement, effective July 18, 2025, related to its revolving loan facility. The Forbearance Agreement acknowledges the existence of certain continuing events of default and provides that, subject to specified conditions, the lender will forbear from exercising remedies related to those defaults through September 16, 2025. The forbearance period may be extended to October 16, 2025 and November 15, 2025, respectively, if the Company meets minimum EBITDA thresholds of $300,000 for the periods ending July 31, 2025 and August 31, 2025. The Forbearance Agreement does not constitute a waiver of any defaults, and the lender reserves all rights and remedies under the loan documents. The Company is in discussions with its lender to resolve these defaults, but the Forbearance Agreement has not been extended as of the date of this filing.
CEO Notes
See Note 9 for loans to STCB from the Company’s CEO.
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