NOTE 7: LEASES

On April 1, 2023, Emerging Growth LLC entered into a modification of the existing lease agreement for its premises in Whitefish, Montana commencing April 11, 2023, for a period of five years at a rate of $3,750 per month, which lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase.  In connection with this lease, the Company recorded a ROU asset and liability of $187,863. During the six months ended June 30, 2025, the lease was further modified to remove the 3% rent increase provision. As a result of this modification, the Company recorded a new ROU asset of $108,812 and a lease liability of $108,701.

In connection with the Ranco acquisition, the Company agreed to assume the Seller’s lease for property related to the Purchased Assets in Los Angeles, California, consisting of approximately 46,000 square feet of space.  The Ranco operating lease agreement commenced on July 1, 2022 and expires on July 31, 2027.  The lease requires monthly base rent payments of $49,782 and required a security deposit of $297,269.  Upon the Ranco acquisition, the Company recognized a right of use asset of $2,270,059 and right of use liability of $1,760,485.  Furthermore, the Company acquired the existing security deposit of $297,269.  In 2023, the Company recognized a right of use asset of $1,993,847 and right of use liability of $2,031,541. Initially, the Company was only paying the $49,782 monthly base rent until the landlord vacated the other half of the space on May 1, 2024, at which point the Company took over the entire premises and the lease rental increased to $96,634 per month.

The following is a summary of related liabilities for all non-cancelable operating leases: