Note 7. LEASES

The Company has operating leases for its daily operations in the PRC and its one F&B store in Taiwan. The lease for one of the offices in the PRC was terminated during Q3 2026, resulting in a gain of $33,646, which was recognized under “Gain on termination of lease” on condensed consolidated income statement for the period ended September 30, 2026. The related lease agreements do not contain any material residual value guarantees or material restrictive covenants. Since the Company’s leases do not provide an implicit rate that can be readily determined, management uses a discount rate based on the incremental borrowing rate. The Company’s weighted-average remaining lease term relating to its operating leases is 1.57 years, with a weighted-average discount rate of 3.04%.

Impairment of Right-of-Use Assets

As of December 31, 2025, the Company recorded impairment on right-of-use assets of $392,733 under operating expenses. Management evaluated the operational results and identified that the Company’s F&B business has continued to incur losses and is not expected to generate profit in the foreseeable future. As all of those assets are associated with Dongguan Leyouyou Catering Management Co., Ltd. (“HCDG”) in the PRC and Hapi Café Co., Ltd. (“HCTW”) in Taiwan, management fully impaired the right-of-use assets of $399,615 for those locations during the year ended December 31, 2025. The difference between impairment loss and decrease of right-of-use assets of $6,882 is related to the foreign exchange translation impact.

The current portion of operating lease liabilities and the non-current portion of operating lease liabilities are presented on the balance sheets. Total lease expenses amounted to $1,696 and $3,497 which was included in general and administrative expenses in the statements of operations for the three months ended September 30, 2026 and 2025, respectively; and lease expenses amounted to $6,636 and $11,362 which was included in general and administrative expenses in the statements of operations for the nine months ended September 30, 2026 and 2025, respectively. Total cash paid for operating leases amounted to $140,176 and $162,288 for the nine months ended September 30, 2026 and 2025, respectively. Supplemental balance sheet information related to operating leases is as follows:

SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO OPERATING LEASES

As of September 30, 2026, the aggregate future minimum rental payments under non-cancelable agreement are as follows:

SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS UNDER NON-CANCELABLE AGREEMENT