NOTE 7 – LEASES

On October 30, 2017, the Company entered into a lease agreement (the “Lease”) to lease approximately 13,420 square feet of office, chemistry, clean room and research and development space located in Colorado for the Company’s principal executive offices and research and development facility. The term of the lease was sixty-one (61) months, beginning on November 1, 2017 and ending on November 30, 2022. In January 2022, the term was extended for an additional twenty-four (24) months.

On November 22, 2022, the Company entered into an amendment to the Lease (“the Amended Lease”) to lease an additional approximately 9,684 square feet of adjacent office and warehouse space.  The term of the Amended Lease is one hundred twenty (128) months, with an effective date of June 1, 2023. Base rent through January 31, 2024 of the Amended Lease term was approximately $30,517 per month. The base rent for the next full year of the Amended Lease term is approximately $377,288, with an increase in annual base rent of approximately 3% in each subsequent year of the lease term.  Commencing on June 1, 2023, monthly installments of base rent and one-twelfth of landlord’s estimate of tenant’s proportionate share of annual operating expenses shall be due on the first day of each calendar month. The Amended Lease also provides an allowance of up to $43,216 to be used solely for the cost of renovations to the additional lease premises.

For purposes of calculating operating lease liability, lease term includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. Any rent escalations, along with rent abatements, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments.

Undiscounted future minimum lease payments under the Amended Lease as of June 30, 2025, by year and in aggregate, including the extended term, are as follows:

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

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities: 

As of June 30, 2025, current operating leases had remaining terms between 6 months and 8.6 years, with some leases having options to extend the lease terms.

Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of June 30, 2025, the Company did not have any finance leases.

Operating and short-term lease costs totaling $110,713 and $32,612 are included in research and development and general and administrative expense, respectively, for the three months ended June 30, 2025. Operating and short-term lease costs totaling $171,552 and $25,403 are included in research and development and general and administrative expenses, respectively, for the three months ended June 30, 2024. Operating and short-term lease costs totaling $197,121 and $53,568 are included in research and development and general and administrative expense, respectively, for the six months ended June 30, 2025. Operating and short-term lease costs totaling $293,679 and $50,806 are included in research and development and general and administrative expenses, respectively, for the six months ended June 30, 2024.