Note 12– Leases

On October 8, 2021, Zhejiang New Material entered into a lease agreement with Hangzhou Forasen Energy Technology Co., Ltd., a PRC company controlled by Mr. Zhengyu Wang, spouse of Ms. Yefang Zhang, to lease approximately 27,147 square feet of office space in Hangzhou. The lease term is for five years with annual rent of RMB432,043 (equivalent of $62,633). At the lease commencement date, the Company prepaid the entire contractual 5-year rent balance of RMB 2,270,214 (equivalent to $358,120) in full. No future lease payment obligations remain outstanding under this arrangement, the corresponding initial operating lease liability was fully extinguished upon the prepayment, and the remaining carrying value of the related right-of-use asset on the consolidated balance sheets represents exclusively the unamortized prepaid lease cost component.

As of March 31, 2026 and September 30, 2025, the remaining average lease term was an average of 0.5 years and 1 year, respectively. The Company’s lease agreements do not provide a readily determinable implicit rate nor is it available to the Company from its lessors. Instead, the Company estimates its incremental borrowing rate based on actual incremental borrowing interest rates from financial institutions in order to discount lease payments to present value. The weighted average discount rate of the Company’s operating leases was 4.8% per annum and 4.8% per annum, as of March 31, 2026 and September 30, 2025, respectively.

Supplemental balance sheet information related to operating leases was as follows: