Leases

3 Months Ended

Mar. 31, 2026

Note 11 – Leases

Equipment Lease

The Company has financed production equipment with an acquisition cost of approximately $168,141 under finance lease with a five-year term and a bargain purchase price of $1.00 at the end of the lease term. The finance lease commenced on May 9, 2023, and expires on May 31, 2028, with monthly lease payments of $3,657 commencing June 1, 2023, and a pre-funding and acceptance fee of $18,079, subject to the ASU 2016-02. As the Company’s lease does not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Peru Facility Lease

On May 10, 2024, the Company entered into a ten-year lease for the 50,000 square-foot manufacturing facility in Pisco, Peru (the “Peru Facility”), which commenced operations in December of 2024. The lease of the Peru Facility requires monthly lease payments of $8,000 in the first two years of the lease, $20,000 in the third year of the lease, $22,000 in the fourth year of the lease, $24,000 in the fourth year of the lease, and $25,000 thereafter. The lease also has a 10-year renewal option, and a buy-out option under which the Company may purchase the Peru Facility for $1,865,456.

In connection with the lease of the Peru Facility, the Company purchased a first position mortgage receivable in the amount of $1,267,000, which is secured by the Peru Facility and was owed by the landlord of the Peru Facility to its former tenant, for a purchase price of $1,267,000 (See Note 7).

The Company has made significant leasehold and facility-specific improvements to the Peru Facility, resulting in the underlying asset having a specialized nature with limited alternative use to the lessor without substantial modification.

The components of lease costs were as follows for the three months ended March 31, 2026 and 2025:

Schedule of Components of Lease Costs

	2026			2025
	For the Three Months Ended
	March 31,
	2026			2025
Finance lease cost:
Amortization of right-of-use asset	$	47,965		$	47,075
Interest on lease liability		37,374			37,369
Capitalized inventory cost		(22,179	)		(38,679	)
Total finance lease cost	$	63,160			45,765

Supplemental balance sheet information of March 31, 2026 and December 31, 2025 related to leases was as follows:

	March 31, 2026			December 31, 2025
Finance lease:
Finance lease assets	$	1,337,927		$	1,385,892

Current portion of finance lease liability	$	127,197			85,658
Noncurrent finance lease liability		1,579,883			1,619,006
Total finance lease liability	$	1,707,080		$	1,704,664

Weighted average remaining lease term:
Finance lease		9.29 years			9.77 years

Weighted average discount rate:
Finance lease		9.1	%		9.1	%

Supplemental cash flow information related to finance leases consisted of an increase in finance lease liabilities of $2,416 and $2,398 for the three months ended March 31, 2026 and 2025, respectively.

The future minimum lease payments due under finance leases as of March 31, 2026, are as follows:

Year Ending	Minimum Lease
December 31,	Commitments
2026 (for the three months remaining)	$	200,915
2027		299,886
2028		294,629
2029		296,000
2030		300,000
2031		300,000
Thereafter		700,000
Total minimum lease payments		2,391,430
Less effects of discounting		684,350
Lease liability recognized		1,707,080
Less current portion		127,197
Long-term finance lease liability	$	1,579,883