5.          Right of Use Assets and Liabilities

Right of Use - Operating

The Company has a month-to-month lease for its office, ramp and hangar space in Carlsbad, California. The Company entered into a lease amendment on February 14, 2023, increasing the monthly rent to $7,108. The Company entered into another lease amendment on February 1, 2024 which increased the monthly rent to $9,438. Effective September 1, 2024, the Company entered into a revised lease agreement for a period of 60 months expiring on August 31, 2029. Under the terms of the agreement, the Company’s initial monthly payment is $28,371 increasing by a minimum of 3% per annum each subsequent year. On September 1, 2024, the Company recorded a right of use asset and liability – operating of $1,317,020. The Company used an imputed interest rate of 12.9%.

As discussed in Note 7, in May 2024, the Company and Demeter signed an Aircraft Asset Rights Transfer Agreement which included leases on four aircraft. At the time of assignment, the Company recorded right of use assets and liabilities – operating of $4,558,913 and $4,558,193, and right of use assets and liabilities – financing of $12,433,818 and $10,520,064, respectively. The Company accounted for the assets and liabilities assumed at their carrying value due to both entities being under common control. The operating leases are payable in monthly payments ranging from $25,000 to approximately $32,000 through December 2029 and contained an initial imputed interest rates ranging from 7.75% to 12.90% and are secured by the equipment being leased.

On December 15, 2025, the Company entered into a lease agreement for a 2004 Cessna 750. The lease agreement is for 60 months and includes monthly payments of $56,509. During the term of the lease, the Company is responsible for any and all maintenance required to keep the Cessna 750 in regulatory compliance and airworthy in accordance with manufacturer and/or FAA regulations. On January 1, 2026, the Company recorded a right of use asset and liability – operating of $2,489,173. The Company used an imputed interest rate of 12.9%.

For the six months ended June 30, 2026 and 2025, the Company recorded total operating lease expense of approximately $1,795,989 and $431,000, respectively. The increase in operating lease expense during the six months ended June 30, 2026 was primarily attributable to additional aircraft operating leases entered into during the period ended June 30, 2026. As of June 30, 2026, the weighted average remaining lease term and the weighted average discount rate for the operating leases was 3.62 years and 10.7%, respectively.

Maturities of the Company’s right of use liabilities – operating is as follows:

Right of Use - Financing

The financing leases are payable in monthly payments ranging from $14,698 to $53,077 through dates ranging from July 2024 to October 2028, contain original imputed interest rates ranging from 3.85% to 7.75%, and are secured by the equipment being leased. Additionally, the leases have balloon payments due at the end of the leases totaling $8,894,298.

For the six months ended June 30, 2026 and 2025, the Company recorded total financing lease expense of approximately $410,202 and $71,000, respectively. As of June 30, 2026, the weighted average remaining lease term and the weighted average discount rate for the financing leases was 1.75 years and 6.5%, respectively.

Maturities of the Company’s right of use liabilities – financing is as follows: