Note 16 - Lease

On June 17, 2013, the Company entered into a lease agreement for office, warehouse, storage, and distribution space in the U.S. with a five year term, commencing on November 1, 2013 and expiring on October 31, 2018. The lease agreement also provides an option to extend the term for an additional six years. On April 23, 2018, the Company extended the lease for another 36 months with an expiration date of October 31, 2021. The monthly rental payment is $42,000 with an annual 3% increase.

During the year ended December 31, 2020, the Company was forgiven rents on its U.S. premises totaled $226,351 related to the effects of COVID-19. The Company elected not to apply modification accounting to these qualifying concessions. Lease expense during 2020 was reduced by $226,351.

The Company has entered into several lease agreements for office and warehouse space in Commerce, California and showroom space in Las Vegas, Nevada and High Point, North Carolina on monthly or annual terms.

On July 15, 2019, Nova Malaysia entered into a sublease agreement for warehouse space with a two year term, expiring on July 14, 2021. The monthly rental payment was 20,000 Malaysia Ringgit ($4,978) and has been adjusted to 35,000 Malaysia Ringgit ($8,711) since August 1, 2020.

On October 29, 2019, Nova Malaysia entered into a lease agreement for showroom with a two year term, commencing on December 1, 2019 and expiring on November 30, 2021. The monthly rental payment is 9,280 Malaysia Ringgit ($2,310).

On August 20, 2020, Nova Malaysia entered into a sublease agreement for an office and service center with a two year term, commencing on September 1, 2020 and expiring on August 31, 2022. The monthly rental payment is $30,000 Malaysia Ringgit ($7,467).

The operating lease expense for the years ended December 31, 2020 and 2019 were as follows:

	2020			2019

Operating lease cost – straight line	$	751,960		$	620,980
Rent forgiveness due to COVID – negative contingent rent		(226,351	)		-
Total lease expense	$	525,609		$	620,980

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2020:

	Operating Leases

2021	$	790,231
2022		701,379
2023		660,894
2024		508,000
Thereafter		-
Total undiscounted cash flows		2,660,504
Less: imputed interest		(226,352	)
Present value of lease liabilities		2,434,152

Lease Term and Discount Rate

	December 31, 2020
Weighted-average remaining lease term - years
Operating leases - USA		3.84
Operating leases - Malaysia		1.27

Weighted-average discount rate (%)
Operating leases - USA		5.00	%
Operating leases - Malaysia		2.88	%