LEASES

9 Months Ended

Sep. 30, 2025

LEASES

LEASES

NOTE 4 - LEASES

Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as an ROU asset and a corresponding lease liability. The new guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.

Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

We recognized a $60,495 right-of-use asset and $67,810 in a related party lease liability for our finance leases. For our finance leases, the asset is included in other long-term assets on the balance sheet and is amortized within operating income over the lease term. The long-term component of the lease liability is included in other long-term liabilities, net, and the current component is included in other current liabilities.

On May 6, 2022, the Company entered into a lease agreement with its CEO, Joey Firestone, for three cargo vans to be used for delivery and distribution of its products. Mr. Firestone is the guarantor of these vehicles, which he acquired for the sole purpose of the operations of Elite Beverage International. The monthly payment for each vehicle is 66 months of $706 (APR 8.99%) (2019 Mercedes Sprinter Van), 72 months of $807 (APR9.95%) (2019 Ford Transit Van), and 72 months of $797. (APR 10.59%) (2020 Ford Transit Van) Each vehicle has a purchase option upon the completion of the lease agreement. Total initial payments were $19,000 for all three vehicles which was $9,000. $5,000, and $5,000 for each one, respectively.

The Company incurred amortization expense, which is included as part of selling, general and administrative expenses, of $17,579 and $17,579 plus interest expense of $5,511 and $6,580 during the nine months ended September 30, 2025 and 2024, respectively.

The tables below present financial information associated with our leases.

	Balance Sheet	September 30,		December 31,
	Classification	2025		2024
Right-of-use assets	Other long-term assets	$	60,495	$	78,075
Current lease liabilities	Other current liabilities		22,284		22,110
Non-current lease liabilities	Other long-term liabilities		45,526		60,364

As of September 30, 2025, our maturities of our lease liabilities are as follows:

	September 30, 2025
Maturity of lease liabilities	Financing  Leases
2025		13,440
2026		27,717
2027		27,012
Thereafter		8,020
Total lease payments	$	76,189
Less: Imputed interest		(8,379	)
Present value of lease liabilities	$	67,810