Item 2. Properties
ITEM 2. PROPERTIES.
We leased approximately 12,775
square feet of office space in San Diego, California, at a monthly rent of $25,754, pursuant to a lease that expired in December 2023.
On October 19, 2023, we signed a lease for office space consisting of approximately 11,400 square feet, located in San Diego, California,
at a monthly rent of $23,370, which commenced on January 1, 2024. In addition to monthly rent, the lease includes payment for certain
common area costs. The term of the lease for the office space is 65 months from the lease commencement date. Our facility is covered by
an appropriate level of insurance, and we believe it to be suitable for our use and adequate for our present needs. Rent expense related
to this property was $321,259 and $309,053 for the years ended June 30, 2024 and 2023.
On or about December 7 ,
2023, we received an invoice from our prior landlord, Hunsaker & Associates, requesting payment of additional rent on our completed
and expired lease of office space located at 9707 Waples Street, San Diego, CA as of December 31, 2023. This invoice of $142,978 purports
to represent charges for variable cost increases during the prior 7 years of the lease, which was discounted by $46,274 and adjusted down
to $96,704 for the three months ended June 30, 2024. We are currently reviewing these charges and will be requesting further validation
of these charges, in accordance with our rights granted under the lease. For the year ended June 30, 2024, we recorded an additional rent
expense of $96,704 and an accrued liability of $72,048 reflecting this pending invoice and a credit of $24,656 for our deposit on the
leasehold property.
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Our Korea-based subsidiary, FTI,
leases approximately 10,000 square feet of office space, at a monthly rent of approximately $8,000, and additional office space consisting
of approximately 2,682 square feet at a monthly rent of approximately $2,700, both located in Seoul, Korea. These leases expired on August
31, 2024, and were extended for an additional 24 months to August 31, 2026. In addition to monthly rent, the leases provide for periodic
cost of living increases in the base rent and payment for certain common area costs. These facilities are covered by an appropriate level
of insurance, and we believe them to be suitable for our use and adequate for our present needs. Rent expense related to these leases
was approximately $112,206 and $128,400 for each of the years ended June 30, 2024 and 2023, respectively.
We lease one corporate housing
facility, located in Seoul, Korea, primarily for our employees who travel, under a non-cancelable operating lease that expired on September
4, 2024, and was extended for an additional twelve months to September 4, 2025. Rent expense related to this lease was $8,089 and $8,095
for the years ended June 30, 2024 and 2023, respectively.
ITEM 3. LEGAL PROCEEDINGS.
Refer to NOTE 6 - COMMITMENTS
AND CONTINGENCIES in the Consolidated Financial Statements.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
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PART II