NOTE 3 – LEASES

Thornmint Road, San Diego, CA

The 48-month lease term commenced February 1, 2023, and the lease provides for an initial base monthly rent of $36,000 with annual rent increases of approximately 4%. In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and other certain operating costs. A discount rate of 8%, which approximated the Company’s incremental borrowing rate, was used to measure the lease asset and liability. The Company obtained a right-of-use asset of approximately $1,560,000 in exchange for its obligations under the operating lease.

Future minimum payments under the facility operating lease, as of March 31, 2025, are listed in the table below (in thousands).

Cash paid for amounts included in the measurement of lease liabilities was approximately $452,000 and $476,000 for the years ended March 31, 2025 and 2024, respectively. Rent expense was approximately $449,000 for each of the years ended March 31, 2025 and 2024.