NOTE 11. LEASES

The Group as lessor

The Group acts as a lessor of dedicated security-related systems and equipment, and recorded the income from the leases as revenues in the consolidated statements of operations. Lease income recognized was as follows:

Schedule of operations lease income recognized

The leases are classified as operating leases, which have remaining terms of 3 to 23 months. The equipment leasing income is recognized on a straight-line basis over the lease term. Future minimum operating lease payments to be received as of September 30, 2025 were as follows:

 Schedule of future minimum operating lease payments to be received

Assets leased under operating leases are included in property and equipment, net in the consolidated balance sheets and depreciated over its estimated useful life. The cost and accumulated depreciation associated with these assets were as follows:

Schedule of cost and accumulated depreciation associated with these assets

Depreciation expense for the years ended September 30, 2024 and 2025 amounted to HK$1,681,965 and HK$1,249,873, respectively.

There were no variable lease conditions or purchase options.

The Group as lessee

The Group leases land use rights in Hong Kong, and leases training center, offices, workshops, warehouse, and carparking spaces under operating leases with terms ranging from 1 to 4 years. For the lease of land, the Group signed an agreement on November 8, 2007 for leasing the land use rights associated with a parcel of land, on which the Group’s workshop is located. Payments were made upfront to obtain the leased land from the owner with a lease period of 55 years.

The Group considers those termination options that are reasonably certain not to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Leases with initial term of 12 months or less are short-term leases not recorded on the consolidated balance sheets. Lease expenses for short-term leases are recognized on a straight-line basis over the lease term.

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

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

 Schedule of the operating leases related assets and liabilities

The weighted average remaining lease terms and discount rates for the operating leases were as follows:

 Schedule of weighted average remaining lease terms and discount rates

A summary of lease expenses recognized in the Group’s consolidated statements of operations and supplemental cash flow information related to operating leases is as follows:

Schedule of lease expenses consolidated statements of income and supplemental cash flow information

The following is a schedule, by year, of maturities of operating lease liabilities as of September 30, 2025:

 Schedule of maturities of operating lease liabilities