NOTE 7 – LEASES

The Company leases office space and ground robots under noncancelable operating lease agreements.

Office Space – Related Party Lease

The office space is leased from an entity owned by the Company’s Chief Executive Officer and principal shareholder and is therefore considered a related-party lease. The lease is an operating lease with an initial term of five years commencing on October 1, 2025. The lease includes an option to renew upon expiration of the initial term; however, renewal periods were not included in the measurement of the right-of-use asset or lease liability because the Company has determined that exercise of the renewal option is not reasonably certain at this time.

Under this lease, the base rent is $44,481 per month for the first twelve months, increasing 3% for each twelve-month period thereafter. The lease is structured as a triple-net arrangement under which the Company also pays taxes, insurance, and common area maintenance charges directly. These triple-net lease (“NNN”) costs are variable in nature and are not included in the measurement of the right-of-use asset or lease liability; they are expensed as incurred. Based on current estimates, NNN costs are approximately $9,885 per month. Total variable lease costs recognized under this arrangement during the three and six months ended June 30, 2026 were approximately $29,655 and $59,310. The estimated all-in monthly occupancy cost is approximately $54,366. This lease arrangement is also disclosed in NOTE 12.

Ground Robot Leases

The Company also leases ground robots used in delivery operations to transport goods between Arrive Point units. These leases have initial terms of two years commencing on July 31, 2025. Lease payments are approximately $4,200 per month. Total lease costs recognized under this arrangement during the six months ended June 30, 2026 were approximately $25,200. The lease includes renewal options; however, renewal periods were not included in the measurement of the right-of-use assets or lease liabilities because the Company has determined that exercise of the renewal options is not reasonably certain at this time.

The ground robot leases and the office space lease have been aggregated in the disclosures below as they share similar remaining terms, discount rates, and lease structures. Management has evaluated the leases and concluded that separate presentation is not necessary to provide a meaningful understanding of the Company’s lease obligations.

Right-of-Use Assets and Lease Liabilities

The following summarizes the right-of-use assets and lease liabilities recorded on the Company’s balance sheet as of June 30, 2026 and December 31,2025:

SCHEDULE OF RIGHT-OF-USE ASSETS AND LEASE LIABILITIES 

Lease Cost

The following is a summary of the lease cost of operating leases recognized in the Company’s statement of operations:

SCHEDULE OF LEASE COST 

Supplemental Cash Flow Information

The following is a summary of the supplemental information related to the Company’s operating leases included in the statements of cash flows:

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION 

Discount Rate and Lease Term

As the rate implicit in the Company’s office lease was not readily determinable, the Company used its incremental borrowing rate to discount future lease payments. The Company’s incremental borrowing rate represents the rate of interest that it would have to pay to borrow, on a collateralized basis and over a similar term, an amount equal to the lease payments in a similar economic environment.

The weighted-average remaining lease term and weighted-average discount rate for operating leases at June 30, 2026 were 4.17 years and 10.32%, respectively.

Future Lease Payments

The future lease payments required under the Company’s leases as of June 30, 2026 for the years ending December 31 are as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS 

Scheduled amounts represent contractual base rent only and exclude variable NNN costs. Variable lease costs associated with the ground robot leases, if any, were not material for the three and six months ended June 30, 2026. Based on current estimates, NNN costs are approximately $9,885 per month and are expensed as incurred.