OPERATING LEASE

9 Months Ended

Sep. 30, 2022

Operating Lease

OPERATING LEASE

NOTE 12 - 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 1.17 years, the second one is in Beijing China with remaining lease term of 0.08 years, the third one is in Changsha, Hunan China that paid month by month rent as of September 30, 2022 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.

On September 29, 2022, that rent agreement in Beijing China with remaining lease term of 0.08 years that will be expiry on October 22, 2022, which have been renewed 1 year from October 23, 2022 to Oct 22, 2023 with monthly rent of $303 (RMB2,000).

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	1.17 years
2nd Beijing office rent	Oct 22, 2022	1 year	0.08 year
3rd Changsha office rent	Nov 15, 2020	3 years	Month by month
4th Beijing office rent	Oct 23, 2022	1 year	1 year

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 nine months ended September 30, 2022 and 2021, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:

	Nine months ended September 30,
	2022			2021
	(Unaudited)			(Unaudited)
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	138,069		$	103,108
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2022	$	142,088		$	104,623
Weighted average remaining lease term – operating leases (in years)		1.17			2.17
Average discount rate – operating leases		4.35	%		4.35	%

EZAGOO LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 (Unaudited)

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

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

Operating leases
Operating right-of-use assets	$	222,142	$	393,245
Total operating right-of-use assets	$	222,142	$	393,245
Operating lease liabilities- current portion	$	170,435	$	181,146
Operating lease liabilities- non-current portion		51,248		214,494
Total operating lease liabilities	$	221,683	$	395,640

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

Period ending September 30,
2023	$	175,474
2024		23,121
Total lease payments		198,595
Less: Imputed interest/present value discount		23,088
Present value of lease liabilities	$	221,683

Lease expenses were $138,069 and $103,108 during the nine months ended September 30, 2022 and 2021, respectively.