LEASE

6 Months Ended

Jun. 30, 2023

NOTE 8 – LEASE

On March 1, 2022, the Company entered into a lease agreement with Chongqing Fengpu Wanjia Biotechnology Co., Ltd for the period from March 1, 2022 to February 28, 2023. Pursuant to the lease agreement, monthly rent was lowered to RMB20,000 (approximately $3,200), payable by the 5^th of each month with the first two-month rent free. The lease was for a one-year term and the Company had the priority to renew the lease. The Company renewed the lease and has been leasing the property since February 28, 2023 for RMB20,000 per month. The lease expires on February 28, 2025. Leases is classified as operating at the inception of the lease and ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease terms of the commencement date with 5.80% incremental borrowing rate used. The lease does not contain any residual value guarantees or material restrictive covenants.

The components of lease expense consist of the following:

		Six Months Ended June 30,
	Classification	2023		2022
Operating lease cost	SG&A expense	$	11,106	$	21,512

Net lease cost		$	11,106	$	21,512

Balance sheet information related to leases consists of the following:

Assets	Classification	June 30, 2023			December 31, 2022

Operating lease ROU assets	Right-of-use assets	$	50,398		$	24,587

Total leased assets		$	50,398		$	24,587
Liabilities

Operating lease liabilities	Current portion	$	31,006		$	23,681
	Long-term portion		21,690			5,501
Total lease liabilities		$	52,696		$	29,182

Weighted average remaining lease term
Operating leases			1.67			1.17

Weighted average discount rate
Operating leases			5.80	%		5.25	%

Cash flow information related to leases consists of the following:

	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8,666	$	18,527
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		7,470		-

Future minimum lease payment under non-cancellable lease as of June 30, 2023 are as follows:

Ending December 31,	Operating Leases
2023	$	16,543
2024		33,087
2025		5,514
Total lease payments	$	55,144
Less: Interest		(2,448	)
Present value of lease liabilities	$	52,696

MAKINGORG, INC. 10-Q