Item 2. Properties
ITEM 2. PROPERTIES.
We conduct our domestic operations at three facilities
in Gardner, Massachusetts, one facility in Littleton, Massachusetts, one facility in El Paso, Texas, and one facility in South Portland,
Maine. The facilities in El Paso, Littleton and South Portland are leased from unrelated parties. The Company rents a manufacturing facility
in Gardner, Massachusetts from Equity Assets, Inc. (“EAI”), an entity formerly owned by the Company’s founder Richard
E. Forkey and then later owned by a trust controlled by his step-daughter, established for the benefit of the step-daughter and four siblings
(including Joseph N. Forkey, who is Chief Executive Officer, President, Treasurer and a Director of the Company). The original lease for
the principal facility in Gardner expired in 1999, and the Company has since been a tenant-at-will, paying rent to EAI of $9,000 per month
for that facility. On July 19, 2023, the trust distributed the EAI shares equally among the five beneficiaries (20% each). Those shareholders
then entered into a shareholder agreement under which all five were elected as directors of EAI and under which Joseph N. Forkey has been
elected as president. The shareholder agreement provides that Dr. Forkey will be recused from any matters involving negotiations with
the Company, including without limitation any lease negotiations. Dr. Forkey is not compensated by EAI for his services as president or
a director, and his present 20% interest in rents being received from the Company is $21,600 per year.
On May 13, 2025, the Company entered into a First
Lease Extension Agreement (the “Extension”) with Texzona Industries, Inc., pursuant to which the Company will continue to
lease approximately 9,375 square feet of commercial space located at 1410 Gail Borden, El Paso, Texas. The term of Extension is for a
period of 36 months commencing on June 1, 2025 and shall end on May 31, 2028. Base rent for each year of the term is $49,219, $50,695
and $52,216. In addition to base rent, the Company is responsible for taxes, insurance and common area maintenance (“CAM”).
Beginning June 1, 2025, the total monthly rental payment including CAM is $6,601.
On May 14, 2025, the Company entered into a Lease
Agreement (the “Southborough Lease”) with 400 Southborough, LLC, pursuant to which the Company has leased approximately 8,750
square feet of commercial space located at 400 Southborough Drive, City of South Portland, County of Cumberland, Maine. The commencement
date was August 1, 2025. The Southborough Lease provides the Company with two options to extend the term for additional five-year periods,
exercisable with at least nine months’ prior written notice. Base rent for the initial term is abated for the first five months
following the commencement date, after which the annual base rent payable is $131,250 (or $10,937.50 per month), with annual increases
of 3%. Base rent for any extension term will be as agreed by the parties or, if not agreed, at 95% of the then-current fair market base
rental rate for similar space in South Portland, as determined by appraisal, with annual increases of 3% during each extension term.
In addition to base rent, the Company is responsible
for its proportionate share (19.34%) of Operating Expenses, as defined in the Lease. The Lease is structured as a triple net lease. The
Company was entitled to a tenant improvement allowance of $25 per rentable square foot for fit-up costs and $0.15 per rentable square
foot for architectural costs, to be disbursed as costs are incurred. The Landlord was responsible for completing certain improvements
to the Premises prior to occupancy, including interior wall construction, loading area, and separate utility metering. The lease commencement
date of the Southborough Lease was August 1, 2025.
On June 2, 2025, the Company entered into a Lease
Agreement (the “Lease”) with 550 King Street, LLC (the “Landlord”), pursuant to which the Company has leased approximately
19,590 rentable square feet of commercial space located at 550 King Street, Building A, Suite 100, Littleton, Massachusetts (the “Premises”).
The Lease provides for an initial term of seven (7.0) years, commencing upon substantial completion of tenant improvements and receipt
of a certificate of occupancy (the “Term Commencement Date”). The Term Commencement Date was October 1, 2025.
The Lease includes two options to extend the term
for additional five-year periods, exercisable with at least nine months’ prior written notice. Base rent for the initial term is
abated for the first six months following the Term Commencement Date, after which base rent is payable as follows: The annual base rent
for the first year of the lease is $361,435.50 (or $30,119.63 per month), and such annual base rent increases by three percent (3%) each
lease year over the previous year’s annual base rent. In addition to base rent, the Company is responsible for its pro-rata share
(7.22%) of real estate taxes and operating expenses, as further defined in the Lease. The Lease provides for the permitted use of the
Premises for general office, laboratory, manufacturing, warehousing, showroom, and related legal uses. The Lease grants the Company a
right of first offer on contiguous space that becomes available in the building during the lease term or any extension.
The extensions associated with the leases discussed
above have been accounted with the assumption that they will not be extended.
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