Note 8 – Leases

Operating Lease

In January 2026, Focus Universal (Shenzhen) Technology Co., Ltd. entered into two thirty-six-month commercial leases with a third party for office spaces of approximately 3,700 and 4,230 square feet. The first lease commenced on January 31, 2026 and will expire on January 30, 2029, with a monthly rent of RMB 14,612 (approximately $2,128). The second lease commenced on February 1, 2026 and will expire on January 31, 2029, with a monthly rent of RMB 24,771 (approximately $3,608). The Company’s incremental borrowing rate for these leases is 10%, representing the rate it would incur on a collateralized basis to borrow an amount equal to the lease payments over a similar term. Lease expense is recognized on a straight-line basis over the lease term. The Company recorded a right of use assets and a lease obligation of $175,271 upon inception of these leases.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As of June 30, 2026 and December 31, 2025, operating lease right-of use assets and lease liabilities were as follows:

Lease term and discount rate:

The minimum future lease payments are as follows:

Related Party Short-term Lease

On February 26, 2026, the Company entered into a one-year storage lease agreement with the CEO’s wife, commencing on March 1, 2026, at a monthly fee of $5,000.

The Company recorded an operating lease expense of $102,259 and $168,417 for the six months ended June 30, 2026 and 2025, respectively. This is included in general and administrative expenses.