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Leases

9 Months Ended

Sep. 30, 2025

NOTE 9 - LEASES

The Company has leases for certain office and production facilities in the PRC which are classified as operating leases. The leases contain payment terms for fixed amounts. Options to extend are recognized as part of the lease liabilities and recognized as right of use assets when management estimates to renew the lease. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing the Company’s incremental borrowing rate at the initial measurement date. For the three months ended September 30, 2025 and 2024, operating lease cost was $18,264 and $20,302, respectively and cash paid for amounts included in the measurement of lease liabilities for operating cash flows from operating leases was $19,119 and $21,061, respectively. For the nine months ended September 30, 2025 and 2024, operating lease cost was $56,732 and $58,931, respectively and cash paid for amounts included in the measurement of lease liabilities for operating cash flows from operating leases was $59,025 and $61,135, respectively. As of September 30, 2025 and December 31, 2024, the Company reported right of use assets of $197,851 and $38,298, respectively and lease liabilities of $198,583 and $39,323, respectively.

Minimum lease payments for the Company’s operating lease liabilities were as follows for the twelve-month period ended September 30:

2026	$	75,322
2027		75,322
2028		56,491
Total undiscounted cash flows		207,135
Less: Imputed interest		(8,552	)
		198,583
Less: Lease liabilities, current portion		(70,326	)
Lease liabilities, net of current portion	$	128,257

The Company has leases with terms less than one year for certain provincial sales offices that are not material.