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RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES
 12 Months Ended
Dec. 31, 2025
Right-of-use Assets And Operating Lease Liabilities  
RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

NOTE 10 - RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

 

The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right-to-use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain or failure to exercise such option would result in an economic penalty.

 

The Company has the following operating leases:

 

  ● Real estate leases for its manufacturing factory and electroplating production line in the PRC (annual payment of approximately $409,000) that will expire on February 28, 2029 and September 30, 2026, respectively. Two office parking facilities (annual payment of approximately $11,000) that will expire on November 30, 2026 and expired March 31, 2027, respectively.
     
  ● Office equipment lease (annual payment of approximately $4,000) that will expire on December 31, 2029, and various real estate leases for its office space in Hong Kong (annual payment of approximately $175,000) that will expire on December 31, 2026, June 14, 2026 and July 31, 2026, respectively.

 

 

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the time of expiration.

 

The weighted-average remaining lease terms and discount rates of the Company’s operating leases are as follows:

 

SCHEDULE OF REMAINING LEASE TERMS AND DISCOUNT RATES

   As of December 31, 
   2025   2024 
Weighted average remaining lease term (years)  $0.83   $1.35 
Weighted average discount rate   4.3%   4.0%

 

Operating lease expenses are allocated between the cost of revenues and selling, general, and administrative expenses. Total operating lease expenses were approximately $800,000, $801,000 and $778,000 for 2025, 2024 and 2023, respectively. Gross sublease income was approximately $225,000, $140,000 and $142,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

 

The following table sets forth the five-year maturity schedule of the Company’s lease liabilities:

 

For the years ending December 31,  Amount 
2026  $254,940 
2027   3,885 
2028   3,885 
2029   3,562 
Total operating lease payments   266,272 
Less: imputed interest   (5,157)
Present value of operating lease liabilities  $261,115