Note 10 – Leases

 

In January 2024, the Company entered into a long-term operating lease agreement for 14,000 square feet of biopharmaceutical manufacturing space in California under a non-cancelable operating lease that expires in December 2033. Under the terms of the lease, the Company is required to pay monthly base rents ranging from $11,900 to $16,218, and pay its proportionate share of property taxes, insurance and normal maintenance costs. The lease agreement includes two options to extend the lease for a term of five years each. The lease has a remaining term of 8.00 years and an implicit weighted average interest rate of 8%.

 

The components of lease cost for operating leases, which are recorded in general and administrative expenses in the years ended December 31, 2025 and 2024 were as follows:

 

  

Year Ended

December 31, 2025

  

Year Ended

December 31, 2024

 
Operating lease cost  $204,599   $168,599 
Short-term lease cost   58,805    56,621 
Total lease cost  $263,404   $225,220 

 

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at December 31, 2025 and 2024:

 

   December 31, 2025   December 31, 2024 
Operating Leases          
Operating lease right-of-use assets  $966,917   $989,471 
Right of use liability operating lease current portion  $139,339   $65,219 
Right of use liability operating lease long term   933,625    1,009,551 
Total operating lease liabilities  $1,072,964   $1,074,770 

 

 

The Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable. The Company estimated its incremental borrowing rate to be 8%.

 

The following table provides the maturities of lease liabilities at December 31, 2025:

 

   Operating 
   Leases 
2026  $218,971 
2027   158,325 
2028   163,866 
2029   169,602 
2030   175,538 
2031 and thereafter   564,344 
Total future undiscounted lease payments   1,450,646 
Less: Interest   (377,682)
Present value of lease liabilities  $1,072,964 

 

Historical Timeline

Fiscal YearFiled
2025Mar 25, 2026Showing above
2024Mar 25, 2025

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.