Note 6 – OPERATING LEASES

Operating lease right -of-use (“ROU”) assets and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the term of lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

The Company has elected the short-term lease exemption for leases with an initial term of twelve months or less and does not recognize right-of-use assets or lease liabilities for such leases. Short-term lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company also elected the practical expedient not to separate lease and non-lease components for its operating leases.

The Company determines the present value of lease payments using the interest rate implicit in the lease when readily determinable. When the implicit rate is not readily determinable, the Company uses its incremental borrowing rate, which represents the rate of interest the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term. The Company’s incremental borrowing rate is a hypothetical rate based on management’s estimate of the Company’s credit profile and prevailing market conditions.

The operating lease ROU asset includes lease payments made prior to the commencement date and excludes lease incentives. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company leases office space under operating lease arrangements. These leases generally require fixed monthly payments and may include variable payments such as common area maintenance charges, utilities, and other operating costs. The Company’s leases do not contain residual value guarantees or material restrictive covenants.

In July 2021, the Company entered into a non-cancelable operating lease for an office facility in Irvine, California.  The lease agreement required 36 monthly lease payments that range from $14,796 to $16,013 per month.  The lease had a remaining term of less than three years and did not contain options to extend. The lease expired in July 2024. Subsequent to the fiscal year end, the Company elected not to renew the lease. 

There were no lease transactions classified as finance leases for the years ended January 31, 2024 and 2023.

Operating lease right-of-use assets and operating lease liabilities are presented in the Company’s balance sheet as follows:

Because the remaining lease term as of January 31, 2024 was less than one year, the entire lease liability was classified as a current liability.

The table below summarizes the components of operating lease costs related to operating leases for the years ended January 31, 2024 and 2023:

Supplementary information on cash flow and other information for leasing activities for the years ended January 31, 2024 and 2023 are as follows:

Future minimum lease payments under non-cancelable operating leases as of January 31, 2024 are as follows: