OPERATING LEASE

12 Months Ended

Dec. 31, 2023

Operating Lease

OPERATING LEASE

13. OPERATING LEASE

The Company has three operating lease agreement for the office space, the first one is in Changsha, Hunan China with remaining lease term of 2 years, the second is in Beijing China with remaining lease term of 1 year, the third is in Changsha, Hunan China with remaining lease term of 0.58 year. 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 Changsha office rent, related party	Dec 31, 2024	2 years	1 year
2nd Beijing office rent, related party	Dec 31, 2024	1 year	1 year
3rd Changsha office rent, related party	Aug 1, 2024	1 year	0.58 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.

EZAGOO LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

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

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

(a) Rent expenses

For the years ended December 31, 2023 and 2022, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:

	As of December 31,
	2023			2022
Lease Cost (included in general and administration in the Company’s audited statement of operations)
Operating lease cost, related party	$	21,735		$	-
Operating lease cost, non-related party		157,444			180,579
	$	179,179		$	180,579
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the year, related party	$	22,194		$	-
Cash paid for amounts included in the measurement of lease liabilities for the year, non-related party		155,643			185,835
	$	177,837		$	185,835
Weighted average remaining lease term, related party (in years)		1.00			-
Weighted average remaining lease term, non-related party (in years)		-			0.92
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, related party	$	21,603	$	-
Operating right-of-use assets, non-related party		-		181,520
Total operating right-of-use assets	$	21,603	$	181,520
Operating lease liabilities, related party - current portion	$	21,603	$	-
Operating lease liabilities, non-related party - current portion		-		156,015
Operating lease liabilities, related party - non-current portion		-		-
Operating lease liabilities, non-related party - non-current portion		-		-
Total operating lease liabilities	$	21,603	$	156,015

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

Period ending December 31,
2024	$	22,115
Total lease payments		22,115
Less: Imputed interest/present value discount		(512	)
Present value of lease liabilities	$	21,603

Lease expenses were $179,179 and $180,579 during the year ended December 31, 2023 and 2022, respectively.