LEASES |
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| LEASES | Note 7. LEASES
The Company has operating leases for its F&B stores and warehouse in Hong Kong. The related lease agreements do not contain any material residual value guarantees or material restrictive covenants. Since the Company’s leases do not provide an implicit rate that can be readily determined, management uses a discount rate based on the incremental borrowing rate. The Company’s weighted-average remaining lease term relating to its operating leases is 1.87 years, with a weighted-average discount rate of 3.08%.
Impairment of Right-of-Use Assets
As of December 31, 2025, the Company recorded impairment on right-of-use assets of $392,733 under operating expenses. Management evaluated the operational results and identified that the Company’s F&B business has continued to incur losses and is not expected to generate profit in the foreseeable future. As all of those assets are associated with Dongguan Leyouyou Catering Management Co., Ltd. (“HCDG”) in the PRC and Hapi Café Co., Ltd. (“HCTW”) in Taiwan, management fully impaired the right-of-use assets of $399,615 for those locations during the year ended December 31, 2025. The difference between impairment loss and decrease of right-of-use assets of $6,882 is related to the foreign exchange translation impact.
The current portion of operating lease liabilities and the non-current portion of operating lease liabilities are presented on the balance sheets. Total lease expenses amounted to $5,594 and $4,018 which was included in general and administrative expenses in the statements of operations for the three months ended March 31, 2026 and 2025, respectively. Total cash paid for operating leases amounted to $53,736 and $50,308 for the three months ended March 31, 2026 and 2025, respectively. Supplemental balance sheet information related to operating leases is as follows:
As of March 31, 2026, the aggregate future minimum rental payments under non-cancelable agreement are as follows:
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