NOTE 11 – LEASES

The Company accounts for its operating lease under FASB ASC Topic 842, Leases (“ASC 842”), which requires lessees to recognize on the balance sheet at lease commencement, the lease assets and the related lease liabilities for the rights and obligations created by operating and finance leases with lease terms of more than 12 months.

Operating Lease

The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement. An addendum to the lease dated June 14, 2022, set a lease renewal term of five years beginning upon completion of improvements to the office space by the landlord, which were completed on September 12, 2022. The annual base rent as of the beginning of this renewal term is approximately $143,000, with a provision for a 3% increase on each anniversary of the rent commencement date. The Company has the option to renew the lease for one additional five-year term.

At March 31, 2026 and December 31, 2025, the operating lease right-of-use asset was $150,000 and $173,000, respectively, and is included under assets on the consolidated balance sheets.

At March 31, 2026 and December 31, 2025, the operating lease right-of-use liability was $151,000 and $160,000, respectively, including the current portion of $100,000 and $95,000, respectively, and is included under liabilities on the consolidated balance sheets.

Over the lease term, the Company is required to amortize the operating lease asset and record interest expense on the lease liability created at lease commencement. Operating lease expense was approximately $49,000 and $45,000 for the three months ended March 31, 2026 and 2025, respectively.

The Company’s non-lease components are primarily related to property maintenance and other operating services, which vary based on future outcomes and are recognized in rent expense when incurred and not included in the measurement of the lease liability.

Operating Lease Subleases

On April 14, 2024, and July 1, 2024, the Company entered into two sublease agreements for its Boca Raton corporate office suites. The subleases continue for the remaining term on the initial lease agreement of three years with no option to extend. The aggregate minimum annual rental income under the subleases is approximately $137,000 with 3% escalations per annum. The Company retains the ability to use the address as its corporate office.

At March 31, 2026 and December 31, 2025, the operating lease subleases right-of-use liability was $12,000 and $12,000, respectively, and is included as an offset to right-of-use assets within other non-current liabilities on the consolidated balance sheet.

Operating lease sublease income was approximately $35,000 and $34,000 for the three months ended March 31, 2026 and 2025, respectively.

Finance Lease

On October 1, 2023, the Company entered into a lease agreement for computer equipment with a lease term of three years.

At March 31, 2026 and December 31, 2025, the finance lease asset was $14,000 and $20,000, respectively, and is included under assets on the consolidated balance sheets.

At March 31, 2026 and December 31, 2025, the finance lease liability was $14,000 and $20,000, respectively, including the current portion of $14,000 and $20,000, respectively, and is included under liabilities on the consolidated balance sheets.

Finance lease expense for the three months ended March 31, 2026, was $7,200 inclusive of interest of $900 and amortization of $6,300, and is included in general and administrative expense in the statements of operations and comprehensive loss. Finance lease expense for the three months ended March 31, 2025, was $7,200 inclusive of interest of $2,100 and amortization of $5,100, and is included in general and administrative expense in the statements of operations and comprehensive loss.