Note J – Commitments and Contingencies

The Company leases office space under an operating lease from November 1, 2024 through December 31, 2026 where the Company and its subsidiaries have maintained operations.

As discussed in Note B, the Company adopted Topic 842 as of January 1, 2019. Upon adoption of Topic 842, the Company's office lease remained an operating lease and a lease liability in the amount of $85,000 was recognized based on the present value of the remaining minimum lease payments, discounted using the Company’s incremental borrowing rate. The related lease ROU asset was recorded in the amount of $85,000, reflecting the present value of future minimum lease payments, adjusted for deferred rent. As of December 31, 2025, the operating lease right-of-use liability and asset amounted to $38,000 and $37,000, respectively. As of December 31, 2024, operating lease right-of-use liability and asset amounted to $76,000 and $72,000, respectively. Total operating lease expense for the years ended December 31, 2025 and 2024, was $38,000 and $40,000, respectively.

Holdings is a guarantor of the full amount of the outstanding CBOP loan with BB&T Bank entered into in 2017, as described In Note C[2]. The outstanding balance on this loan was $854,000 and $1,358,000 at December 31, 2025 and 2024, respectively.

The Company expected any potential obligations from these guarantees to be reduced by the recoveries of the respective collateral and had recorded a liability of $11,000 at December 31, 2025 and 2024.

The Company does not directly provide medical services and as a result does not currently have professional medical liability insurance. The Company expects to add expects to add several categories of liability insurance once operations at Elite Health Plan, Inc. expand further.