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LEASES

9 Months Ended

Sep. 30, 2024

NOTE 7. LEASES

In April 2018, we entered into a 10-year lease agreement for a new 9,000-square-foot facility that contains office, warehouse, lab and research and development space in Frederick, Maryland. The lease agreement commenced in December 2018 when the property was ready for occupancy. The agreement provided for annual rent of $143,460, an escalation clause that increases the rent 3% year over year, a landlord tenant improvement allowance of $405,000 and additional landlord work as discussed in the lease agreement. We took occupancy of the property on December 17, 2018, and the lease was amended in March 2019 to provide for a 4-month rent holiday and a commencement date of April 1, 2019. A 7% discount rate was determined using our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

The balances for our operating lease where we are the lessee are presented as follows within our condensed consolidated balance sheet:

Operating leases:	September 30, 2024 (Unaudited)		December 31, 2023

Assets:
Operating lease right-of-use asset	$	417,190	$	467,935
Liabilities:
Current Portion of Long-Term Operating Lease	$	125,666	$	115,658
Long-Term Operating Lease, Net of Current Portion		546,844		642,527
Total Right of Use Liability	$	672,510	$	785,185

The components of lease expense are as follows and are included within general and administrative expense on our condensed consolidated statement of operations:

For the Three Months Ended September 30, 2024

(Unaudited)

For the Three Months Ended September 30, 2023

(Unaudited)

Operating lease expense

39,329

	For the Nine Months Ended September 30, 2024		For the Nine Months Ended September 30, 2023
	(Unaudited)		(Unaudited)

Operating lease expense	$	117,986	$	117,986

Other information related to leases where we are the lessee is as follows:

	September 30, 2024 (Unaudited)			December 31, 2023

Weighted-average remaining lease term:
Operating leases	4.25 years			5.00 years

Discount rate:
Operating leases		7.00	%		7.00	%

Supplemental cash flow information related to leases where we are the lessee is as follows:

For the Three Months Ended September 30, 2024

(Unaudited)

For the Three Months Ended September 30, 2023

(Unaudited)

Cash paid for amounts included in the measurement of lease liabilities:

41,577

40,366

	For the Nine Months Ended September 30, 2024		For the Nine Months Ended September 30, 2023
	(Unaudited)		Unaudited)
Cash paid for amounts included in the measurement of lease liabilities:	$	123,521	$	119,923

As of September 30, 2024, the maturities of our operating lease liability are as follows:

Year Ended:	Operating Lease
October 1 – December 31, 2024	$	41,577
December 31, 2025		170,051
December 31, 2026		175,153
December 31, 2027		180,408
December 31, 2028		185,819
Thereafter		33,751
Total minimum lease payments		786,759
Less: Interest		114,249
Imputed value of lease obligations		672,510
Less: Current portion		125,666
Long-term portion of lease obligations	$	546,844