6. Operating Leases

Operating lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives, such as tenant improvement allowances. Variable costs, such as maintenance and utilities based on actual usage, are not included in the measurement of right-of-use (“ROU”) assets and lease liabilities but are expensed when the event determining the amount of variable consideration to be paid occurs. As the implicit rate of the leases is not determinable, the Company uses an incremental borrowing rate (“IBR”) based on the information available at the lease commencement date in determining the present value of lease payments. Rather than relying on a single rate source, the Company evaluated three data points calculated from the three standard methods to determine a reasonable, supportable, and entity-specific IBR consistent with ASC 842. Based on this analysis, the rate applied is the median of the available supportable rates, which reflects a secured borrowing assumption and balances entity-specific credit risk and market benchmarks. Lease expenses are recognized on a straight-line basis over the lease term.

The Company leases its office space in Mountain View, California, under an operating lease agreement dated March 25, 2025, originally signed for a term of six and one half years that commenced in May 2025. Monthly payments are approximately $104,478. The lease includes common area maintenance costs that are paid separately from rent based on actual costs incurred. The Company’s previous lease in Menlo Park, California ended in May 2025.

The Company also leases storage containers from a third-party provider for use on-site in Mountain View, California, at a monthly rate of $141 per unit. These arrangements are on a month-to-month basis and are cancelable upon thirty (30) days’ notice. Under the short-term lease practical expedient of ASC 842, the Company does not recognize right-of-use assets or lease liabilities for these arrangements, and instead, lease payments are expensed as incurred.

The Company’s right-of-use asset, net balance as of  June 30, 2026 and  December 31, 2025, respectively are presented on the Company’s balance sheets.

The Company’s future lease payments under the non-cancellable lease as of  June 30, 2026, which are presented as lease liabilities on the Company’s condensed balance sheet, are as follows:

Lease expense for the three months ended June 30, 2026 and 2025 was $307,315 and $297,743, respectively, and for the six months ended June 30, 2026 and 2025 was $613,389 and $455,040, respectively. The amortization of the operating lease right-of-use assets, which is included in the lease expense, for the three months ended June 30, 2026 and 2025 totaled $144,899 and $298,007, respectively, and for the six months ended June 30, 2026 and 2025 totaled $434,842 and $476,124, respectively. The weighted average discount rate is based on the incremental borrowing rate that is utilized to present value the remaining lease payments over the lease term.