COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2026

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company has various leases that expire between now and 2036. The Company’s right-of-use assets and lease liabilities primarily represent lease payments that are fixed at the commencement of a lease and variable lease payments that are dependent on an index or rate. Lease payments are recognized as lease cost on a straight-line basis over the lease term, which is determined as the non-cancelable period, including periods in which termination options are reasonably certain of not being exercised and periods in which renewal options are reasonably certain of being exercised. The discount rate is determined using the Company’s estimated incremental borrowing rate coinciding with the lease term at the commencement of a lease. The estimated incremental borrowing rate for the Company was determined to be between 3.0% - 10.6%. Rent expense for the three months ended March 31, 2026 and 2025 was $133,247 and $98,003, respectively. Additionally, in the normal course of business, the Company enters into short-term leases having terms of one year or less. These leases are generally equipment leases and storage areas entered into for short periods of time (e.g., daily, weekly, or monthly) to satisfy immediate and/or short-term operational needs of the business which can arise based upon the nature of particular services performed. Short term lease expenses relating to these agreements amounted to $249,584 and $139,632 for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the weighted-average remaining operating lease term and discount rate are 6.4 years and 9.8%, respectively.

On October 21, 2024, the Company entered into a long-term lease agreement for corporate office space with a third party. This agreement commenced on April 1, 2025, and requires payments of $11,884 monthly, escalating 3% per annum for a term of 120 months, which ends March 31, 2035. The Company has the option to renew such lease for up to an additional one-year term. The Company accounted for such lease as operating lease as there were no purchase option nor transfer of title at the end of the lease. The Company recognized right of use assets and operating lease liabilities amounted to $988,436. Additionally, the Company was also granted a tenant improvement allowance of $280,115. The Company determined that the improvements are lessee improvements and accordingly, recognized the tenant improvement allowance as a lease incentive and a reduction to the initial recognized right of use assets and operating lease liabilities. During the three months ended March 31, 2026, the Company received reimbursement for the $280,115 tenant improvement allowance. On October 1, 2025, the Company entered into an amendment in its long-term lease agreement for its corporate office space with a third party and extended the term from April 1, 2025 to September 30, 2035, and the rent payment will commence on October 1, 2025 rather than April 1, 2025. The Company accounted for this amendment as a lease modification. There were no changes in the lease classification as a result of this modification and the Company continues to recognize such a lease as operating lease. The Company remeasured its right of use assets and operating lease liabilities using an updated incremental borrowing rate. The change in right of use assets and operating lease liabilities related to this lease modification resulted in a decrease of $76,520 for the year ended December 31, 2025.

On January 1, 2025, the Company entered into an amendment in its lease agreement with a third party wherein the Company is the lessee of certain commercial property. The amendment commenced on January 1, 2025, and extended the term from May 31, 2025 to December 31, 2029, and increase in monthly rent payments to from $3,650 monthly to $6,878 monthly subject to 3% increase per annum. The Company has the option to renew such lease to an additional one year term. Management determined that the renewal option is not reasonably certain to occur. The Company accounted for this amendment as a lease modification. There were no change in the lease classification as a result of this modification and the Company continues to recognize such a lease as operating lease. The Company remeasured its right of use assets and operating lease liabilities using an updated incremental borrowing rate. The change in right of use assets and operating lease liabilities related to this lease modification amounted to $324,104 for the year ended December 31, 2025.

On March 20, 2025, the Company entered into an amendment in its long-term lease agreement with a related party wherein the Company is the lessee of certain commercial property. The amendment commenced on April 1, 2025, and extended the term from December 31, 2025 to December 31, 2029, and increase the square footage of the leased property, a corresponding increase in monthly rent payments from $7,500 monthly to $9,800 monthly. The Company has the option to renew such lease for up to an additional six month extension and month-to-month thereafter. Management determined that the renewal option is not reasonably certain to occur. The Company accounted for this amendment as a lease modification. There were no change in the lease classification as a result of this modification and the Company continues to recognize such a lease as operating lease. The Company remeasured its right of use assets and operating lease liabilities using an updated incremental borrowing rate. The change in right of use assets and operating lease liabilities related to this lease modification amounted to $380,823 for the year ended December 31, 2025.

On February 24, 2026, the Company entered into a renewal lease agreement for office and storage space located in Blanco, Texas. The lease commenced on March 1, 2026 and expires on February 28, 2029, with a non-cancelable term of three years. The lease requires fixed monthly payments of $1,250 and the Company is responsible for certain utilities and other occupancy-related costs. The Company accounted for the lease as an operating lease under ASC 842. At lease commencement, the Company recognized an operating right-of-use asset of $38,737 and corresponding operating lease liabilities, measured based on the present value of future lease payments using the Company’s incremental borrowing rate at commencement. The operating lease liabilities include both current and noncurrent portions and are included within operating lease liabilities on the condensed consolidated balance sheet as of March 31, 2026.

	Three months ended (Unaudited)
Lease cash flow information:	March 31, 2026		March 31, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	133,247	$	98,003
Lease incentives reimbursement		280,115		-
Total	$	413,362	$	98,003

Summary of lease-related assets and liabilities:	March 31, 2026 (Unaudited)			December 31, 2025 (Audited)
Operating lease right-of-use assets	$	2,691,377		$	2,582,496
Accumulated amortization		(812,844	)		(664,933	)
Net operating ROU assets	$	1,878,533		$	1,917,563
Current operating liabilities	$	338,810		$	323,935
Noncurrent operating lease liabilities		1,886,208			1,663,229
Total operating lease liabilities	$	2,225,018		$	1,987,164

CALLAN JMB INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Maturity of lease liabilities	March 31, 2026 (Unaudited)
2026	$	545,587
2027		554,998
2028		546,692
2029		486,756
2030		162,910
Thereafter		789,124
Total future undiscounted lease payments		3,086,067
Less: interest		(861,040	)
Present value of lease liabilities	$	2,225,018

Legal Proceedings

The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business.

During May 2024, the Company was sent a demand letter alleging that the company breached the terms of a Customer Service Agreement with one of its vendors that it did business within a prior year. The vendor alleges that the Company improperly terminated the agreement without proper notice and therefore owes it $507,573. The Company responded to the vendor’s demand letter and asserts that it only owes the vendor the sum of $85,000 which is recorded as part of its accounts payable as of December 31, 2023. During February 2025, the parties agreed to settle the matter for $240,800. The Company as of December 31, 2024, increased its accrued expenses by $155,800 to reflect the settled amount and the $240,800 was paid on February 26, 2025.

The Company is also subject to litigation by its former employee where the ultimate disposition or resolution is uncertain. Management believes that as of March 31, 2026, material losses arising from this litigation are not probable.

Management is not aware of any other pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.