Company: LIFD
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001096906-25-000346
Chunk: 162

Company: LFTD PARTNERS INC.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 162
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 substantial ongoing payment obligations

We have substantial ongoing payment obligations, including payments on our loans from Surety Bank, payroll and benefits, rent and overhead costs, inventory purchases, legal fees and other professional fees, bonuses, preferred stock dividends, other operating expenses, income taxes, excise taxes, and other liabilities. A failure to pay our financial obligations when they become due and payable may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We have significant financial risk if our principal depository bank were to become bankrupt or insolvent

In connection with our loans from Surety Bank, we have agreed that Surety Bank will serve as our principal depository bank. If Surety Bank ever were to become bankrupt or insolvent, we could potentially lose millions of dollars of our cash on hand that is held in our checking and money market accounts at Surety Bank. We do not have insurance covering that risk. That risk may have a material adverse effect on our Company and the trading price of our common stock.

We are subject to restrictions and covenants under our loans from Surety Bank 

Under the terms of our loan agreements with Surety Bank, we are obligated to comply with certain loan covenants and restrictions, including the following: (1) the ratio of our annual EBIDA (earnings before interest, depreciation and amortization), divided by our scheduled annual debt service payments to Surety Bank, must be 1.5 or higher based on our tax returns, beginning with the 2023 return (although this loan covenant has been waived by Surety Bank in regard to 2024); (2) we must not permit the outstanding principal balance of the $3,000,000 Working Capital Loan to exceed 40% of the fair market value of the collateral securing the Working Capital Loan; and (3) we must maintain our primary operating accounts with a $1,000,000 minimum deposit account balance with Surety Bank for the life of the $910,000 Business Loan. If for any reason we fail to comply with these loan covenants and restrictions, Surety Bank would be entitled to declare a default under the loan agreements. Such a default could have a material adverse effect on our Company and the trading price of our common stock.

Under the Surety Bank loan agreements, we are also subject to covenants not to take certain actions without the consent of Surety Bank, including such things