NOTE 14. LEASES

The Company leases office spaces and land use rights under non-cancelable operating leases, with terms ranging from one to fifty years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term. Leases with initial term of 12 months or less are not recorded on the balance sheet.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets:

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The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2026:

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Operating lease costs and short-term lease costs for the year ended June 30, 2024 were ¥3,175,289 and ¥327,812, respectively.

Operating lease costs and short-term lease costs for the year ended June 30, 2025 were ¥466,601 and ¥1,365,627, respectively.

Operating lease costs and short-term lease costs for the year ended June 30, 2026 were ¥2,599,941 ($383,184) and ¥869,237 ($128,110), respectively.

There was no impairment loss recognized for the ROU asset during the years ended June 30, 2024, 2025, and 2026.

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2026:

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