Note 8 – Leases

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding.

The Company leases its current facilities from Gold Team Inc., a company owned by the Company’s CEO, which owns both the Canoga Park, CA and Milford, Ohio locations. The leases expire annually on April 30 and the Company exercised its renewal option for an additional 12 months. The new lease is not more than 12 months; therefore, the Company has elected the short-term lease exclusion under ASC 842. On October 1, 2024, Gold Team agreed to forego rent on both properties until July 1, 2025, and no lease expense was accrued or paid during the six months ending June 30, 2025. Subsequent to June 30, 2025, the rental rate at the Milford, Ohio location was reduced to $6,000 per month, with the first payment due on July 1, 2025. The lease for the Canoga Park, CA location was renewed on a month-to-month basis and GoldTeam has agreed to continue to forgo any rent at the California facility until further notice by Gold Team. Effective January 1, 2019, the Company adopted the provision of ASC 842 Leases.

The lease expense for the three months ended March 31, 2026, and 2025 was $18,000 and $0, respectively. Cash paid under operating leases during the three months ended March 31, 2026, and 2025 was $18,000 and $0, respectively. As of March 31, 2026, the weighted average remaining lease term is 0.1 years, and the weighted average discount rate is 8%.