Note 10. Leases

The Company conducts its operations in leased facilities under a non-cancelable operating lease expiring on December 31, 2027.

The Company entered into a second amendment to the operating lease agreement, relating to the leased facilities. The second amendment provides for an extension term to December 31, 2027, and for monthly rent payments of, initially, $7,147.00, escalating annually by 3.5%. The second amendment became effective on June 1, 2025.

The Company has capitalized the present value of the minimum lease payments commencing June 1, 2025, using an estimated incremental borrowing rate of 6.5%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.

As of June 30, 2025 and December 31, 2024, the operating lease asset amounted to $198,400 and $32,400, respectively, and operating lease liability amounted to $205,600 and $35,200, respectively.

There are no other material operating leases. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.

Total operating lease costs were $20,400 and $40,000 for the three and six months ended June 30, 2025, respectively, and $17,600 and $31,000 for the three and six months ended June 30, 2024, respectively.

Undiscounted future minimum lease payments as of June 30, 2025, by year and in aggregate are as follows: