Note 11 – Leases

Equipment Lease

The Company has financed production equipment with an acquisition cost of approximately $168,141 under finance lease with a five-year term and a bargain purchase price of $1.00 at the end of the lease term. The finance lease commenced on May 9, 2023, and expires on May 31, 2028, with monthly lease payments of $3,657 commencing June 1, 2023, and a pre-funding and acceptance fee of $18,079, subject to the ASU 2016-02. As the Company’s lease does not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Peru Facility Lease

On May 10, 2024, the Company entered into a ten-year lease for the 50,000 square-foot manufacturing facility in Pisco, Peru (the “Peru Facility”), which commenced operations in December of 2024. The lease of the Peru Facility requires monthly lease payments of $8,000 in the first two years of the lease, $20,000 in the third year of the lease, $22,000 in the fourth year of the lease, $24,000 in the fourth year of the lease, and $25,000 thereafter. The lease also has a 10-year renewal option, and a buy-out option under which the Company may purchase the Peru Facility for $1,865,456.

In connection with the lease of the Peru Facility, the Company purchased a first position mortgage receivable in the amount of $1,267,000, which is secured by the Peru Facility and was owed by the landlord of the Peru Facility to its former tenant, for a purchase price of $1,267,000 (See Note 7).

The Company has made significant leasehold and facility-specific improvements to the Peru Facility, resulting in the underlying asset having a specialized nature with limited alternative use to the lessor without substantial modification.

The components of lease costs were as follows for the three and six months ended June 30, 2026 and 2025:

Schedule of Components of Lease Costs 

Supplemental balance sheet information of June 30, 2026 and December 31, 2025 related to leases was as follows:

 Schedule of Supplemental Information Related to Leases

For the six months ended June 30, 2026 and 2025, supplemental cash flow information related to finance leases consisted of principal payments on finance lease obligations of $19,253 and non-cash additions to finance lease liabilities of $4,802, respectively.

The future minimum lease payments due under finance leases as of June 30, 2026, are as follows:

 Schedule of Future Minimum Finance Lease Payments