NOTE 7 – LEASES

During 2024, we had one office lease, the location of our corporate offices. The corporate office lease was entered into on August 12, 2021, began on January 1, 2022 and expires on December 31, 2026, with initial monthly payments of $6,922 with escalations. We also rent office space on a month-to-month basis in Santa Barbara, California, the location of our CEO for $1,000 per month. In addition, we have a finance lease for miscellaneous small office equipment, which commenced in the fourth quarter of 2024 with an 84-month term and an original balance of $71,622.

We have elected the short-term lease recognition exemption for all leases with an original term of 12 months or less. This means, for those leases that qualify, we will not recognize rights of use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. We elected the practical expedient to not separate lease and non-lease components for all of our finance leases. For our real estate operating leases, we have only considered the fixed portion of our lease payment commitment and have excluded the variable components from the capitalized ROU and lease liability.

The amounts are as follows:

The following tables summarized the operating and financing lease obligations.

Our two office leases do not contain implicit interest rates that can be readily determined. As a result, we used the best estimate of our incremental borrowing rate. At December 31, 2025 and 2024 the weighted average annual discount rate for our operating leases was 4.83% and the weighted average remaining term was 3 and 4 years, respectively. The weighted average annual discount rate for our finance lease was 11.91% for 2025 and 2024, and the weighted average remaining term was 6 and 7 years.