Lease

3 Months Ended

Mar. 31, 2022

Lease

Lease

Note 9 – Lease

The Company recorded its operating lease expense of $75,597 and $16,295 for the three months ended March 31, 2022 and 2021, respectively.

On April 8, 2015, AVX Design & Integration Inc. entered an eighty-six month commercial lease with a third party for an approximately 2,592 square foot office space. The lease commenced on July 1, 2015 and will end on August 31, 2022. The monthly rent is $4,536 with approximately a 3% increase rate in each additional year. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 15%. Lease expense for the lease is recognized on a straight-line basis over the lease term.

On December 7, 2021, Focus Universal (Shenzhen) Technology Co. LTD entered a thirty-eight month commercial lease with a third party for an approximately 5,895 square foot office space. The lease commenced on December 25, 2021 and will end on February 28, 2025. The monthly rent is RMB70,097 (approximately $11,053) with approximately an 11.1% to 12.5% increase rate in each additional year. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 10%. Lease expense for the lease is recognized on a straight-line basis over the lease term.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As of March 31, 2022 and December 31, 2021, operating lease right-of use assets and lease liabilities were as follows:  

	March 31, 2022		December 31, 2021
Operating lease right-of-use assets	$	270,787	$	420,137
Lease liabilities, current portion	$	128,582	$	121,568
Lease liabilities, less current portion	$	172,710	$	302,387

Lease term and discount rate: 

	March 31, 2022	December 31, 2021
Weighted average remaining lease term
Operating lease	0.42 to 2.92 years	0.67 to 3.17 years
Weighted average discount rate
Operating lease	10% - 15%	10% - 15%

The minimum future lease payments are as follows: 

	Amount
Year ending December 31, 2022	$	126,885
Year ending December 31, 2023		147,318
Year ending December 31, 2024		163,840
Year ending December 31, 2025		27,536
Total minimum lease payment		466,770
Less: imputed interest		(63,299	)
Present value of future minimum lease payments	$	403,471