Quarterly report [Sections 13 or 15(d)]

Leases

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Leases
 3 Months Ended
Mar. 31, 2026
Leases  
Leases

Note 9. Leases

 

Operating lease

 

We have a new lease contract entered June 1, 2025 which includes both our office facility and warehouse space that expires May 31, 2028. The monthly “Base Rent” is $12,232 and $13,150. The Base Rent is increased by 3.0% each year. We had a lease contract entered June 1, 2024 which includes both our office facility and warehouse space that expired May 31, 2025. The monthly “Base Rent” was $11,876 and $12,767.

 

 

We recognized total lease expense, primarily related to our operating leases, on a straight-line basis in accordance with ASC 842.

 

As of March 31, 2026 and December 31, 2025, the Company recorded a refundable security deposit of $10,000 for its warehouse space and is included in other assets on the balance sheet.

 

The operating lease expense were as follows:

 

    2026     2025  
    Three months ended March 31,  
    2026     2025  
Lease cost                
Operating lease cost   $ 113,203     $ 101,442  

 

Supplemental balance sheet information related to operating leases was as follows:

 

    March 31,     December 31,  
    2026     2025  
Operating lease right-of-use assets at inception   $ 856,787     $ 856,787  
Accumulated amortization     (221,644 )     (153,931 )
Total operating lease right-of-use assets   $ 635,143     $ 702,856  
                 
Operating lease liabilities - current   $ 280,324     $ 273,545  
Operating lease liabilities - non-current     362,510       434,695  
Total operating lease liabilities   $ 642,834     $ 708,240  
                 
Right-of-use assets obtained in exchange for new operating lease liability     -       -  
                 
Weighted-average remaining lease term — operating leases (years)     2.17       2.42  
Weighted-average discount rate — operating leases     6.50 %     6.50 %

 

Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year as of March 31, 2026, were as follows:

 

    Total  
Year Ended December 31,        
2026   $ 233,773  
2027     319,218  
2028     134,641  
Thereafter     -  
Total undiscounted lease payments     687,632  
Less: Imputed interest     (44,798 )
Operating lease liabilities   $ 642,834  

 

Sublease

 

On August 1, 2021, the Company entered into a Sublease Agreement with its related party, CTC (“Sublandlord”), whereby the Company shall sublease certain offices, rooms and shared use of common spaces located at 150 Sykes Creek Parkway, Merritt Island, FL. The sublease agreement is a month-to-month lease and may be terminated with 30 days’ notice to the Sublandlord. The monthly rent shall be $4,570 from inception through January 31, 2022, $4,707 from February 1, 2022 to January 31, 2023 and $4,847 from February 1, 2023 to January 31, 2024. On February 1, 2024, the Company extended the month-to-month Sublease agreement. The monthly rent shall be $4,618.03 from February 1, 2024 to January 31, 2025, $4,756.57 from February 1, 2025 to January 31,2026 and $4,899.27 from February 1, 2026 to January 31, 2027. A common area maintenance fee (CAM) will be charged in addition to the monthly rent. During the three months ended March 31, 2026 and 2025, the Company recorded $33,419 and $20,510 directly related to this short-term month to month lease to lease expenses.