Lease

9 Months Ended

Sep. 30, 2024

Lease

Lease

Note 13 – Lease

On June 17, 2013, the Company entered into a lease agreement for office, warehouse, storage, and distribution space in the United States with a five year term, commencing on November 1, 2013 and expiring on October 31, 2018. The lease agreement also provided an option to extend the term for an additional six years. On April 23, 2018, the Company extended the lease for another three years with an expiration date of October 31, 2021. On October 15, 2021, the Company extended the lease for another five years with an expiration date of October 31, 2026. The initial monthly rental payment is $42,000 with an annual 3% increase.

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 (see Note 10) 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 initial monthly rental payment was 20,000 Malaysia Ringgit ($4,232) and was increased to 35,000 Malaysia Ringgit ($7,406) effective August 1, 2020. On July 15, 2021, Nova Malaysia extended the lease for another two years with an expiration date of July 31, 2023. Nova Malaysia did not extend this lease after July 31, 2023.

On October 29, 2019, Nova Malaysia entered into a lease agreement for a showroom with a two-year term, commencing on December 1, 2019 and expiring on November 30, 2021. On November 26, 2021, Nova Malaysia extended the lease to November 30, 2022 with an option for renewal for another term of 24 months. On October 4, 2022, Nova Malaysia renewed the lease for two years to November 30, 2024. The monthly rental payment is 9,280 Malaysia Ringgit ($1,964).

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. On July 29, 2022, Nova Malaysia extended the lease for another two years with an expiration date of August 31, 2024. The monthly rental payment is 30,000 Malaysia Ringgit ($6,348). Nova Malaysia did not extend the lease after August 31, 2024.

Operating lease expense for the nine months ended September 30, 2024 and 2023 was as follows:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2024		2023		2024		2023
Operating lease cost – straight line	$	578,259	$	636,569		189,429		197,588

The following is a schedule, by years, of maturities of operating lease liabilities as of September 30, 2024:

	Operating Leases
2024	$	176,725
2025		701,142
2026		598,820
Thereafter		-
Total undiscounted cash flows		1,476,687
Less: imputed interest		(48,244	)
Present value of lease liabilities		1,428,443

Lease Term and Discount Rate

	September 30, 2024
Weighted-average remaining lease term – years
Operating leases – USA		2.08
Operating leases – Malaysia		0.17
Weighted-average discount rate (%)
Operating leases – USA		3.36	%
Operating leases – Malaysia		2.78	%

Supplemental cash flow information related to leases where the Company was the lessee for the nine months ended September 30, 2024 and 2023 was as follows:

	2024		2023
Operating cash outflows from operating leases	$	577,847	$	618,083