Note 5 - Right of use lease assets and lease obligations  

The Company is a lessee in several non-cancellable operating leases for transportation and office space.

The table below presents the operating lease assets and liabilities recognized on the balance sheet as of June 30, 2026 and December 31, 2025:

The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.

The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

Dallas office lease

On November 25, 2025, the Company and LLL Four Forest, LP (“LLL”) signed an Office Lease Agreement (“Agreement”) whereby approximately 8,006 rentable square feet of space, of which approximately 5,577 rentable square feet are located in Suite 1450 located on the fourteenth floor, and approximately 2,429 square feet are located in Suite 1740 located on the seventeenth floor. The lease commencement date is January 1, 2026 and the term is for three years and five months with the lease termination being on or around May 31, 2029. The Agreement provided five (5) months of abated rent at the beginning of the lease term.  A security deposit of $16,679 was paid in December 2025 and prepaid rent of $192,144 was also paid in December 2025. With the payment of the prepaid rent in December 2025, the Company’s rent is paid through May 2027. Beginning on June 1, 2027 and extending through May 31, 2028, the Company will pay monthly rent at $24.50 per square foot.  Beginning on June 1, 2028 and extending through May 31, 2029, the Company will pay monthly rent at $25.00 per square foot. The Company will also pay its prorata share of electricity, taxes and common area maintenance in the building.

The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2026 are:

Note 5 - Right of use lease assets and leases obligations (cont’d)

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancellable operating leases with terms of more than one year to the total operating lease liabilities recognized on the condensed balance sheets as of June 30, 2026:

Operating lease costs were $102,000 and $188,000 for the three and six months ended June 30, 2026, respectively. Operating lease costs are included within general and administrative expenses on the statements of operations.

Operating lease costs were $80,000 and $142,000 for the three and six months ended June 30, 2025, respectively. Operating lease costs are included within general and administrative expenses on the statements of operations.

Cash paid for amounts included in the measurement of operating lease liabilities was ($17,000) and ($1,000) for the three and six months ended June 30, 2026, respectively. These amounts are included in operating activities in the statements of cash flows.

Cash paid for amounts included in the measurement of operating lease liabilities was $24,000 and $63,000 for the three and six months ended June 30, 2025, respectively. These amounts are included in operating activities in the statements of cash flows.