The Company leases its production facility at 5225 W. Houston Street, Sherman, Texas under a non-cancellable operating lease that commenced on July 1, 2024, and expires on July 31, 2029 (61 months). The lease is triple-net; the Company pays all property taxes, insurance, and maintenance. The lease is accounted for under ASC 842.

Right-of-use asset and Lease liability

At commencement the Company recorded a ROU asset and corresponding lease liability measured at the present value of future lease payments, discounted at the Company’s 11.84% incremental borrowing rate. As of March 31, 2026, the ROU asset, net of amortization, was $452,131; the lease liability was $474,533, of which $117,782 is classified as current and $356,751 as non-current.

Lease expense

For the three months ended March 31, 2026, lease-related expenses included ROU amortization of $27,130 and interest expense on the lease liability of $14,573. Both amounts are included in cost of revenue. 

Maturity of lease liability

Future minimum lease payments as of March 31, 2026, are as follows:

The lease contains no purchase options, residual value guarantees, or extension or termination options that the Company is reasonably certain to exercise.