NOTE 7 — LEASES

Flipside AI leases office space and parking facilities in the Philippines under operating lease arrangements. Right-of-use assets and lease liabilities were recognized on acquisition at the present value of the remaining lease payments.

The Company leases office space under operating lease arrangements with remaining terms of approximately one to three years. The Company does not have any finance leases. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of lease payments.

Operating lease cost is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient not to separate lease and non-lease components for all classes of underlying assets, and not to recognize ROU assets and lease liabilities for short-term leases (term of twelve months or less).

The following table summarizes the supplemental balance sheet information related to leases as of June 30, 2026 and December 31, 2025:

The components of lease cost recognized in the statements of operations for the six months ended June 30, 2026 and 2025 were as follows:

Other information related to leases as of and for the six months ended June 30, 2026 and 2025 was as follows:

The weighted-average remaining lease term was 1.66 years and 1.8 years as of June 30, 2026 and December 31, 2025, respectively, and the weighted-average discount rate used in measuring lease liabilities was 8.0% for both periods.

The following table summarizes the maturity of undiscounted cash flows for operating lease liabilities as of June 30, 2026: