Leases

ASC 842, “Leases”, requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company adopted ASC 842, January 1, 2020, using the effective date method and elected certain practical expedients allowing the Company not to reassess:

The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company leases eleven medical facilities and one vehicle as operating leases as of June 30, 2026. The Company recorded operating lease expenses of $90,608 and $115,447 for the three months ended June 30, 2026 and 2025, respectively, and $187,108 and $234,518 for the six months ended June 30, 2026 and 2025, respectively. Lease expense includes all rent payments for all leased facilities, including those subject to the Company’s short-term lease election under ASC 842. Under this election, leases with terms of 12 months or less are not recorded as right-of-use assets or lease liabilities, but the related rent expense is included in total lease expense.

Only leases that result in recognized right-of-use assets and lease liabilities are included in the future minimum lease payments table below. Short-term leases accounted for under the 12-month election are excluded from the future commitments disclosure.

The Company has operating lease liabilities with future commitments as follows:

The following table summarizes supplemental information about the Company’s leases:

Employees

In connection with separate employment agreements and related addendums with Alex Cunningham, the Company’s Chairman, President and Chief Executive Officer, and Daniel Thompson, the Company’s former Chairman, from time to time the Company accrued each of their respective compensation elements at their election rather than pay them in cash to Accrued expenses - related parties in the Company’s consolidated balance sheet. The total outstanding accrued compensation as of June 30, 2026 and December 31, 2025 for Alex Cunningham was $162,250 and $2,163,000, respectively, and for Daniel Thompson was $0 and $2,237,167, respectively, all of which is included in Accrued expenses – related parties in the consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively. The total interest accrued as of June 30, 2026 was $1,013 for Alex Cunningham and $0 for Daniel Thompson. See also Note 5. Related Parties and Note 7. Notes and Loans Payable.