5. LEASES

We lease approximately 2,000 square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices) from an unrelated party pursuant to an operating lease that, as amended, will expire on September 30, 2024, with an option to extend the lease an additional two years. Our base rent is approximately $5,000 per month and the lease provides for annual increases of approximately 3% and an escalation clause for increases in certain operating costs. The lease, as amended, resulted in a right-of-use asset and lease liability of approximately $260,000 with a discount rate of 10%. Rent expense was approximately $66,000 for each of the years ended October 31, 2023 and 2022.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The remaining 35-month lease term as of October 31, 2023 for the Company’s lease includes the noncancelable period of the lease and the additional two-year option period that the Company believes it is reasonably certain to exercise. All right-of-use assets are reviewed for impairment when indications of impairment are present.

As of October 31, 2023, the annual minimum lease payments of our operating lease liability were as follows (in thousands):

SCHEDULE OF MINIMUM LEASE PAYMENTS