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Note 7 - Leases

9 Months Ended

Sep. 30, 2025

Note 7. Leases

Accounting for Leases as Lessee

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets (“ROU”), lease liabilities, and lease liabilities – related party. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. None of the leases entered into have an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future payments. Incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any prepaid lease payments made and initial direct costs incurred and exclude lease incentives. The Company’s lease terms may include options to extend or terminate the lease, which is recognized when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company has operating leases for two healthcare clinics in Naples and Fort Myers, Florida:

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Naples Lease (Related Party): The Company leases its Naples clinic from Dura Properties, LLC, an entity owned and controlled by Dura’s former sole member prior to the acquisition. Following the acquisition on September 8, 2025, the former member became a director and minority shareholder of the Company. Right-of-use (ROU) assets and operating lease liabilities was measured under ASC 805 as if the leases were new at the acquisition date. The amended lease commenced on September 8, 2025 and expires on December 31, 2027. It is non-cancelable and requires monthly base rent of $6,000 (subject to 3% annual escalations), plus $2,000 in common area maintenance charges, and $1,000 in taxes.

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Fort Myers Lease (Third Party): The Company amended a lease for its Fort Myers clinic on September 8, 2025, with a commencement date of September 8, 2025, and an expiration date of November 30, 2026. Right-of-use (ROU) assets and operating lease liabilities was measured under ASC 805 as if the leases were new at the acquisition date. The amended lease is non-cancellable and requires monthly base rent of $5,000 in the first year, plus $2,000 in common area maintenance charges, subject to 3% annual escalations

The components of lease expense included in the Company’s statement of operations were as follows (in thousands):

		For the three months ended		For the nine months ended
		September 30,		September 30,
	Expense Classification	2025		2025
Operating lease expense:
Amortization of ROU asset	Selling, general and administrative	$	7	$	7
Accretion of operating lease liability	Selling, general and administrative		1		1
Amortization of ROU asset - related party	Selling, general and administrative		8		8
Accretion of operating lease liability - related party	Selling, general and administrative		2		2
Total operating lease expense		$	18	$	18

Other lease expense	Selling, general and administrative		–		–
Total		$	18	$	18

Other information related to leases is as follows:

	As of September 30,
	2025
Weighted-average remaining lease term:
Operating leases (in years)		1.94
Weighted-average discount rate:
Operating leases		6.61	%

Amounts relating to leases were presented on the balance sheet as of September 30, 2025 in the following line items (in thousands):

		As of September 30,
	Balance Sheet Classification	2025
Assets:
Operating lease asset	Right-of-use asset	$	107
Operating lease asset - related party	Right-of-use asset - related party		243
Total non-current lease assets		$	350

Liabilities:
Current
Operating lease liability	Lease liability, short term	$	87
Operating lease liability - related party	Lease liability, short term - related party		102
Non-current
Operating lease liability	Lease liability, non-current		15
Operating lease liability - related party	Lease liability - related party, non-current		143
Total lease liabilities		$	347

The future minimum lease payments required under leases as of September 30, 2025 were as follows (in thousands):

Fiscal Year
Remainder of 2025	$	52
2026		202
2027		121
Total		375
Less: imputed interest		(28	)
Lease liability	$	347