Note 7 – Property and Equipment

Property and equipment consisted of the following as of December 31, 2025 and December 31, 2024:

Schedule of Property and Equipment  

Depreciation of property and equipment was $616,581 and $205,907 for the years ended December 31, 2025, and 2024, respectively. Depreciation expense related to manufacturing equipment is included in inventory and recognized in cost of goods sold as the related inventory is sold.

The Company leases a manufacturing facility located in Pisco, Peru, which is accounted for as an operating lease (see Note 11). The lease includes a purchase option that allows the Company to acquire the facility at the end of the lease term. During 2024, the landlord of this facility entered bankruptcy proceedings.

To protect its long-term strategic interests, the Company purchased the first mortgage position on the facility and continues to hold its contractual purchase option under the lease. Management currently intends to acquire ownership of the facility either (i) through the landlord’s bankruptcy settlement process or (ii) by exercising the purchase option at the end of the lease term, although there can be no assurance that the Company will be successful in this regard. The Company accounts for the facility as a leased asset. The first mortgage position is included on the balance sheet in other assets of $1,267,000 as of December 31, 2025 and December 31, 2024 (see Note 8). As of December 31, 2025, the $1,267,000 balance has been paid in full. The Company capitalizes leasehold improvements related to the buildout of the facility, which expanded the Company’s production capacity.