NOTE 8 — LEASE

The Company uses approximately 19,200 square feet of office space at the Seoul Marina free of charge. Although there is no formal lease agreement, the Company determined that the ASC 842 accounting standard applies and recognized the fair value of the rent-free use of the property through May 2031 as a right-of-use (ROU) asset, with corresponding lease expense recognized in the statement of operations.

At the time of initial acquisition from SMC in July 2021, the Company used the following assumptions to measure the right-of-use asset and lease liability:

As of December 31, 2025, the weighted-average remaining lease term of operating leases was approximately 5.5 years and the weighted-average discount rate was 3.0%. The maturity analysis of operating lease expense is presented in the following table (in KRW and USD):

SCHEDULE OF MATURITY ANALYSIS OF OPERATING LEASE PAYMENTS

Based on these assumptions, the Company calculated the present value of 10 years of free rent to be $2,775,512 and recognized it as a long-term right-of-use asset as of June 30, 2021. Since the space is provided free of charge, no lease liability was recognized. The ROU asset has been amortized at approximately $23,000 per month over the 10-year lease term. Because the Company initially allocated $2,935,658 to the SMC receivable and the leasehold rights, it recognized an impairment loss of $158,278 on the ROU asset as of December 31, 2021.

In December 2024, the Company sold its entire equity interest in Hanryu Bank Co., Ltd. (“HBC”), a subsidiary that held the rent-free rights to the Seoul Marina building. However, through an asset transfer agreement between the Company and HBC, the Company acquired the rent-free rights to the Seoul Marina building. The transfer amount was based on the net book value of the ROU asset as of the contract date and was offset against the Company’s outstanding loan receivable.

The carrying amount of the operating lease right-of-use asset consisted of the following:

 SCHEDULE OF AMOUNT OF OPERATING LEASE RIGHT TO USE OF ASSET

Lease expense related to the right-of-use asset was $231,967 for the year ended December 31, 2025. Following the sale of the subsidiary in December 2024, the lease expense has been reclassified to discontinued operations and is not in the statement of operations for year ended December 31, 2024.

As of December 31, 2025, the remaining lease term was approximately 5.4 years, ending in May 2031. Because the Company is not required to make fixed lease payments under the arrangement, the Company had no operating lease liability as of December 31, 2025 or December 31, 2024, and no future minimum lease payments are required under the arrangement.