OPERATING LEASE

6 Months Ended

Jun. 30, 2021

Operating Lease

OPERATING LEASE

NOTE - 14 OPERATING LEASE

The Company has two operating lease agreements for the office space, one is in Beijing China with lease term of 2 years 8 months and 17 days, one is in Changsha, Hunan China that paid month by month rent as of June 30, 2021 after the lease ends. A lease with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

This standard did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans.

EZAGOO LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

(a) Rent expenses

For six months ended June 30, 2021, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:

	Six months Ended June 30, 2021
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	58,483
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2021	$	59,014
Weighted average remaining lease term – operating leases (in years)		2.42
Average discount rate – operating leases		4.35	%

The supplemental balance sheet information related to leases for the period is as follows:

Operating leases
Right-of-use assets	$	432,839
Total operating lease assets	$	432,839
Short-term operating lease liabilities	$	85,776
Long-term operating lease liabilities	$	350,439
Total operating lease liabilities	$	436,215

Maturities of the Company’s lease liabilities are as follows:

Period ending June 30,	Operating Lease
2021 (remaining 6 months)		94,083
2022		193,541
2023		170,424
Total lease payments		458,048
Less: Imputed interest/present value discount		(21,833	)
Present value of lease liabilities		436,215

For six months ended June 30, 2020, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:

	Six months Ended June 30, 2020
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	27,171
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2020	$	30,276
Weighted average remaining lease term – operating leases (in years)		0.42
Average discount rate – operating leases		4.35	%

The supplemental balance sheet information related to leases for the period is as follows:

Operating leases
Right-of-use assets	$	22,435
Total operating lease assets	$	22,435
Short-term operating lease liabilities	$	24,958
Long-term operating lease liabilities	$	-
Total operating lease liabilities	$	24,958

Maturities of the Company’s lease liabilities are as follows:

Period ending June 30,	Operating Lease
2020 (remaining 5 months)		25,230
2021		-
Total lease payments		25,230
Less: Imputed interest/present value discount		(272	)
Present value of lease liabilities		24,958

Lease expenses were $58,483 and $27,171 during the six months ended June 30, 2021 and 2020, respectively.