v3.26.1
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2026
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 6 – Commitments and Contingencies

 

Operating Lease

 

The Company accounts for leases in accordance with FASB ASC 842: Leases, which requires lessees to apply the right-of-use (ROU) model by recognizing a right-of-use asset and a lease liability for all leases with terms exceeding 12 months.

 

Lease classification determines the pattern of expense recognition in the Statements of Operations:

 

●Operating leases: Recognized on a straight-line basis as lease expense over the lease term.

 

Lease Recognition and Measurement

 

The Company evaluates whether an arrangement contains a lease at inception and recognizes the lease in the financial statements upon lease commencement (the date the underlying asset is available for use). ROU assets represent the Company’s right to use an asset over the lease term, while lease liabilities reflect the present value of future lease payments.

 

At lease commencement:

 

●ROU assets and lease liabilities are initially measured at the present value of lease payments.

 

●The Company primarily uses its incremental borrowing rate (IBR) to determine the present value of lease payments, except when an implicit rate is readily determinable.

●The IBR is based on market data, adjusted for credit risk and lease term.

 

Practical Expedients and Lease Components

 

The Company applies certain practical expedients to simplify lease accounting:

 

●Lease and non-lease components are combined for classification and measurement, except for direct sales-type leases and production equipment embedded in supply agreements.

●Short-term leases (12 months or less, without purchase or renewal options) are not recorded on the balance sheet.

 

Lease Term and Expense Recognition

 

●Lease liabilities include options to extend or terminate when reasonably certain of exercise.

●Operating lease expense is recognized on a straight-line basis over the lease term and reported under general and administrative expenses.

●Variable lease payments based on an index/rate are initially measured using the rate at lease commencement, with differences expensed as incurred.

 

Company Lease Commitments

 

As of June 30, 2026 and December 31, 2025, the Company had no finance leases under FASB ASC 842.

 

Right-of-Use Operating Lease

 

On July 8, 2025, the Company executed a five-year lease for its office space, covering the period from July 8, 2025 to July 8, 2030.

 

See below regarding original lease and related termination of that lease.

 

●Lease term: 60 months (five years)

●Monthly lease payments:

○Months 1-12: $3,626 per month

○Months 13-24: $3,777 per month

○Months 25-60: $4,200 per month

●Total lease payments: $240,036 (excluding variable monthly operating expenses)

●Occupancy date: August 1, 2025

 

●Renewal option: The lease has no renewal options.

●Lease classification: The lease is evaluated under FASB ASC 842, Leases, and recorded as a right-of-use (ROU) asset and lease liability based on the present value of lease payments ($196,049) at lease commencement.

●Lease incentives/allowances – none

●Guarantee – The lease is guaranteed by the Company’s Chief Executive Officer. The guarantee is unconditional and continuing, and covers the full performance of the lease obligations, including payment of rent and fulfillment of all tenant responsibilities.

 

The Company recognizes lease expense on a straight-line basis over the lease term.

 

Right-of-Use Operating Lease – Lease Termination

 

On June 26, 2025, the Company entered into an agreement to terminate its existing operating lease (originally executed March 17, 2022), which was originally scheduled to expire on May 31, 2027. The last payment was made July 1, 2025. Pursuant to the agreement, the termination is effective as of August 31, 2025.

 

As part of the termination agreement, the Company paid a lump-sum settlement of $20,000 to the lessor. This payment has been recorded as a lease termination expense in the Statements of Operations in 2025.

 

Upon termination, the Company:

 

●Derecognized the right-of-use (ROU) asset and the corresponding lease liability related to the lease;

●Recognized any difference between the asset and liability as a gain or loss on lease termination;

●Included the $20,000 termination fee in the total expense recognized upon derecognition.

 

Loss on lease termination of $15,018 was calculated as follows:

 

     
Right-of-Use Asset  $28,228 
Cash paid to terminate lease   20,000 
Lease liability   (33,210)
Loss on lease termination  $15,018 

  

On March 17, 2022, the Company executed a five-year lease extension for its office space, covering the period from June 1, 2022, through May 31, 2027.

 

●Lease term: 60 months (five years)

 

●Monthly lease payments:

○Years 1-3: $1,600 per month

○Years 4-5: $1,700 per month

●Total lease payments: $57,600 for the first three years and $40,800 for the last two years

●Renewal option: The Company has the option to extend the lease for an additional five years through May 31, 2032.

●Lease classification: The lease is evaluated under FASB ASC 842, Leases, and recorded as a right-of-use (ROU) asset and lease liability based on the present value of lease payments at lease commencement.

●Renewal option assessment: At lease inception, based on historical operations, the Company does not expect to exercise the renewal option and has excluded it from lease liability calculations.

 

The Company recognizes lease expense on a straight-line basis over the lease term. 

 

The tables below present information regarding the Company’s operating lease asset and liability at June 30, 2026 and December 31, 2025, respectively:

 

  June 30, 2026   December 31, 2025 
Assets          
           
Operating lease - right-of-use asset - non-current  $160,107   $179,711 
           
Liabilities          
           
Operating lease liability  $169,672   $184,298 
           
Weighted-average remaining lease term (years)   4.09    4.58 
           
Weighted-average discount rate   8%   8%

 

The components of lease expense were as follows:

 

  June 30, 2026   June 30, 2025 
         
Operating lease costs          
           
Amortization of right-of-use operating lease asset  $19,604   $8,065 
Lease liability expense in connection with obligation repayment   7,130    1,635 
Total operating lease costs  $26,734   $9,700 
           
Supplemental cash flow information related to operating leases was as follows:          
           
Operating cash outflows from operating lease (obligation payment)  $21,756   $9,700 
Right-of-use asset obtained in exchange for new operating lease liability  $-   $- 

 

Future minimum lease payments required under leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31,:

 

2026 (6 months)  $22,511 
2027   47,439 
2028   50,400 
2029   50,400 
Thereafter   29,400 
Total undiscounted cash flows   200,150 
Less: amount representing interest   30,478 
Present value of operating lease liability   169,672 
Less: current portion of operating lease liability   32,778 
Long-term operating lease liability  $136,894 

  

Contingencies – Strategic Cooperation Agreement

 

On January 15, 2022, the Company entered into a strategic cooperation agreement with a supplier for the development, manufacture, and distribution of PET/CT imaging systems. The agreement establishes transfer pricing terms for PET/CT systems that become effective only upon receipt of U.S. Food and Drug Administration (FDA) clearance for the Company’s next-generation PET/CT 4D system, which is currently undergoing testing in preparation for submission of a 510(k) amendment.

 

All obligations under the agreement are expressly conditioned upon receipt of FDA clearance, a future regulatory event outside the Company’s control. Following clearance, the agreement will have an initial term of seven years, which may be extended for an additional three years subject to the Company’s achievement of specified annual purchase requirements during the initial term.

 

The Company evaluated this arrangement under FASB ASC 440, Commitments, and concluded that it does not constitute an unconditional purchase obligation under ASC 440-10-50-2 because all purchase obligations are contingent upon receipt of FDA clearance. Accordingly, no disclosure of minimum future purchase commitments is required under ASC 440-10-50-4.

 

The Company further evaluated the arrangement under FASB ASC 450, Contingencies. As of June 30, 2026 and December 31, 2025, receipt of FDA clearance is considered reasonably possible but not probable. Accordingly, no accrual has been recorded, and the financial impact of the arrangement, if any, cannot be reasonably estimated until FDA clearance is obtained. There can be no assurance that FDA clearance will be obtained within the anticipated timeframe or at all.

 

Contingencies – Legal Matters

 

The Company may be subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.

 

As of June 30, 2026 and December 31, 2025, respectively, the Company is not aware of any litigation, pending litigation, or other transactions that require accrual or disclosure.