OPERATING LEASE

12 Months Ended

Dec. 31, 2021

Operating Lease

OPERATING LEASE

14. OPERATING LEASE

The Company has three operating lease agreement for the office space, the first one is in Beijing China with remaining lease term of 1.83 years, the second one is in Beijing China with remaining lease term of 0.83 years, the third one is in Changsha, Hunan China that paid month by month rent as of December 31, 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.

The details lease terms are shown as followings:

Lease agreement	Expiry Date	Original Lease Term	The Remaining Lease Term
1st Beijing office rent	Dec 9, 2023	2.67 years	1.83 years
2nd Beijing office rent	Oct 22, 2022	1 years	0.83 years
3rd Changsha office rent	Nov 15, 2020	3 years	Month by month

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.

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

(a) Rent expenses

For the year ended December 31, 2021, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:

	As of December 31,
	2021			2020
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited statement of operations)	$	156,870		$	51,126
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the year	$	153,364		$	56,807
Weighted average remaining lease term – operating leases (in years)		1.83			-
Average discount rate – operating leases		4.35	%		4.35	%

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

Operating leases
Operating right-of-use assets	$	350,984	$	-
Total operating right-of-use assets	$	350,984	$	-
Operating lease liabilities- current portion	$	184,928	$	-
Operating lease liabilities- non-current portion		169,616		-
Total operating lease liabilities	$	354,544	$	-

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

Period ending December 31,
2022	$	196,693
2023		173,199
Total lease payments		369,892
Less: Imputed interest/present value discount		(15,348	)
Present value of lease liabilities	$	354,544

Lease expenses were $156,870 and $51,126 during the year ended December 31, 2021 and 2020, respectively.