MicroAlgo Inc.

Lease commitments

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 and failure to exercise such option which result in an economic penalty. All of the Company’s real estate leases are classified as operating leases.

The Company has entered into seven non-cancellable operating lease agreements for 7 office spaces expiring through January 2028. As of June 30, 2025, upon adoption of FASB ASU 2016-02, the Company recognized approximately RMB 1.2 million (USD 0.2 million) right of use (“ROU”) assets and RMB 1.2 million (USD 0.2 million) of lease liabilities based on the present value of the future minimum rental payments of leases, using a weighted average discount rate of 7%, which is determined using an incremental borrowing rate with similar term in the PRC. 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 and the weighted average remaining lease terms are 1 year. The Company takes the short-term lease exemption for the lease agreements with a term of less than 1 year and expensed nil and nil for the year ended December 31, 2024 and the six months ended June 30, 2025, respectively.

The maturity of the Company’s operating lease obligations is presented below:

Note 12 —Shareholders’ equity