NOTE 7. LEASES

On April 1 of 2024, Tianju leased office space (approximately 595 square meters) under an operating lease agreement with Han Ruijun. Under the terms of the agreement, Tianju is committed to make lease payments of approximately $19,000 (RMB137,000) annually for the period between April 1, 2024 and March 31, 2027.

On August 14, 2024, Qingguo leased office space (approximately 482 square meters) under an operating lease agreement with Inner Mongolia Chuangfuhui Enterprise Management Co., Ltd. Under the terms of the agreement, Qingguo was committed to make lease payments of approximately $30,700 (RMB 220,000) for the period between September 10, 2024 and September 10, 2025. On September 19, 2025, Qingguo with Chen Mingyue signed a non-cancellable operating agreement to lease this office space. Under terms of the lease agreement, from September 10, 2025, Qingguo is committed to make lease payments totalling approximately $30,898 per year for 1 year.

On November 20, 2024, Chengheng leased an office space (approximately 611 square meters) under an operating lease agreement from Dongsheng District Baiyan Health Consultation Department. Under the terms of the agreement, Chengheng was committed to make lease payments of approximately $16,700 (RMB120,000) for the period between November 20, 2024 and November 20, 2025.

On March 11 of 2025, Longduoduo Health Technology leased office space (approximately 150 square meters) under an operating lease agreement with Liu Libao. Under the terms of the agreement, Longduoduo Health Technology is committed to make lease payments of approximately $4,200 (RMB30,000) for the period between March 11, 2025 and March 10, 2026.

On August 8, 2025, Chengheng leased an office space (approximately 400 square meters) under an operating lease agreement from Pan Jirong and Zhong Jing. Under terms of the lease agreement, from August 8, 2025 to August 7, 2028, Chengheng is committed to make lease payments of approximately $24,000 (RMB 170,000) per year for 3 years.

On July 20, 2025, Rongbin leased office space (approximately 97.73 square meters) under an operating lease agreement with Han Yuefei. Under the terms of the agreement, Rongbin is committed to make lease payments of $1,685 (RMB 12,000) per year for the period between July 20, 2025 and July 19, 2026.

On August 20, 2025, Rongbin leased office space (approximately 626.38 square meters) under an operating lease agreement with Inner Mongolia Baogang Jinmao Real Estate Development Co., Ltd. Under the terms of the agreement, Rongbin is committed to make lease payments of approximately $14,000 (RMB 100,320) per year for the period between September 1, 2025 and August 31, 2026.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company did not combine lease and non-lease components.

Most leases do not include options to renew. The exercise of lease renewal options has to be agreed to by the lessors. The depreciable life of assets and leasehold improvements are limited by the term of leases, unless there is a transfer of title or purchase option reasonably certain of exercise. Lease expense is recognized on a straight-line basis over the term of the lease. Lease expense related to noncancelable operating leases was $49,844 and $26,960 for the six months ended December 31, 2025 and 2024, respectively.

Balance sheet information related to the Company’s leases is presented below:

As most of the Company’s leases do not provide an implicit rate, the Company uses the 1-5 years borrowing rates from its bank, i.e. 3.5% and 3.95%, based on the information available at the commencement date in determining the present value of lease payments.

Maturities of lease liabilities are as follows: