NOTE 8: LEASES

The Company leases an office, parking area and automobiles under non-cancelable operating lease agreements. The leases have remaining lease terms ranging from one to two years.

Supplemental balance sheets information related to leases is as follows:

The Company calculated the implicit rate on the automobile lease with information contained in the respective leases. Based upon the lease agreements, the Company was able to calculate such amount. As the office lease did not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments, which is reflective of the specific term of the leases and economic environment of each geographic region.

The Company’s leased automobile is currently used for promotional services. These leases often contain large material upfront downpayments due to the fact that they are expensive automobiles which are necessary for business development.

The Company has entered into two office leases with related parties, which are the chief executive officer and a family member of the chief executive officer. The lease with the family member of the chief executive officer has expired in October 2025.

Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancelable leases, are as follows:

Total lease expense for operating leases accounted for under ASC 842 amounted to $93,549 and $118,550 for the three months ended June 30, 2026 and 2025, respectively, of which $16,500 and $41,500, respectively, were incurred in connection with leases from related parties. Total lease expense for leases accounted for under ASC 842 amounted to $187,099 and $226,099 for the six months ended June 30, 2026 and 2025, respectively, of which $33,000 and $72,000, respectively, were incurred in connection with leases from related parties.

The Company leases equipment under a non-cancelable finance lease agreement.

Supplemental balance sheet information related to leases is as follows:

The maturities of finance lease liabilities as of June 30, 2026 were as follows:

For the six months ended June 30, 2026, the Company recognized amortization expense of $26,042 related to finance lease right-of-use assets and interest expense of $6,434 related to finance lease liabilities.

For the three months ended June 30, 2026, the Company recognized amortization expense of $15,625 related to finance lease right-of-use assets and interest expense of $4,098 related to finance lease liabilities.

The Company has various other leases which do not fall under the guidance of ASC 842, primarily because there is not an identified asset. Such leases are not included in any amounts noted above.