NOTE 13 - LEASES

Effective August 27, 2025, the Company entered into a triple net lease for approximately 1,413 square feet of office space in Houston, Texas. The lease commenced October 1, 2025, and expires on February 28, 2031.

The Company has elected the practical expedient under ASC 842 not to separate lease and non-lease components for its office facility lease. The Company’s facility lease is a triple-net lease under which the non-lease components, consisting of operating expense reimbursements, are variable in nature and are expensed as incurred. Only fixed lease payments are included in the measurement of the lease liability and right-of-use asset.

Under the terms of the lease, all of the non-lease components are variable in nature, not fixed. The triple net operating expense reimbursements (tenant’s proportionate share of real estate taxes, insurance, CAM, etc.) are estimated monthly at approximately $1,983, but that amount is subject to periodic adjustment and annual true-up to actual landlord costs. Because these amounts fluctuate based on actual costs rather than being fixed in the agreement or tied to a stated index at commencement, they are variable payments excluded from lease payments under ASC 842-10-30-6 and are expensed as incurred. The parking obligation is similarly variable as the lease states the rate is “such amounts as may be charged by Landlord from time to time.” As a result, the only amounts included in the lease liability and ROU asset measurement are the fixed base rent payments ($3,768 escalating to $4,160), reflecting an initial 5-month abatement period.

The Company’s operating ROU asset and lease liability in respect of this property was as follows:

SCHEDULE OF OPERATING RIGHT OF USE ASSET AND LEASE LIABILITY

Cash paid during the year for amounts included in the measurement of lease liabilities is as follows:

SCHEDULE OF MEASUREMENT OF LEASE LIABILITIES 

Future annual minimum under non-cancellable operating leases as of December 31, 2025, are as follows:

SCHEDULE OF FUTURE ANNUAL MINIMUM UNDER NON-CANCELLABLE OPERATING LEASES