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COMMITMENTS AND CONTINGENCIES | 12 Months Ended
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Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 11 – COMMITMENTS AND CONTINGENCIES Operating Rental Leases ASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model but has been updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We have adopted the above ASU as of January 1, 2019. The right of use asset and lease liability have been recorded at the present value of the future minimum lease payments, utilizing a 5% average borrowing rate and the company is utilizing the transition relief and “running off” on current leases. As of May 1, 2017, our corporate headquarters were located at 2990 Redhill Unit A, Costa Mesa, CA. On March 10, 2017, the Company signed a lease agreement for an 18,200-square foot CTU Industrial Building. Lease term is seven years and two months beginning July 1, 2017. This lease ended as of November 30, 2023. In October of 2018 we signed a sublease agreement with our facility in Italy with an indefinite term that may be terminated by either party with a 60-day notice for 1,000 Euro per month. Due to the short termination clause, we are treating this as a month-to-month lease. This lease ended as of December 31, 2023. We have relocated our corporate office to 1340 Reynolds Avenue Unit 120, Irvine, CA 92614. On December 1, 2023, the Company signed a lease agreement for a 3000-square foot of office space with Metro Creekside California, LLC. Lease term is thirty-eight months beginning December 1, 2023 and expiring on January 31, 2027. On October 16 of 2023, we signed a sublease agreement to relocate the HRS operations from Costa Mesa to Irvine, California for one year and 7 months commencing December 1, 2023 and ending June 30, 2025. We also signed a temporary storage lease and Due to the short termination clause, we are treating this as a month-to-month lease. The components of lease costs, lease term and discount rate with respect of these two leases with an initial term of more than 12 months are as the following: Balance sheet information related to the Company’s operating leases: SCHEDULE OF OPERATING LEASE COST
|  | As of December 31, 2023 |
Right-of-used assets |  | $ | 245,974 |
Lease liabilities – current |  | $ | 117,606 |
Lease liabilities – non-current |  |  | 128,480 |
Total lease liabilities |  | $ | 246,086 |
The weighted-average remaining lease term and the weighted-average discount rate of the above two leases are as follows:
|  | Year Ended December 31, 2023 |
Weighted average remaining lease term (years) |  |  | 2.25 |  |  |  |  |
Weighted average discount rate |  |  | 6.5 | % |  |  |  |
The following is a schedule, by year of lease payment for above two leases as of December 31, 2023: SCHEDULE OF LEASE PAYMENT
For the 12 months ending |  | Lease Payment |
2024 |  |  | 129,622 |
2025 |  |  | 90,243 |
2026 |  |  | 40,642 |
2027 |  |  | 3,511 |
Total undiscounted cash flows |  |  | 264,017 |
Imputed Interest |  |  | (17,932 | )
Present value of lease liabilities |  | $ | 246,086 |
Effective August 5, 2022, Shuya entered a 48-month lease for a natural gas recycle station from Leishen (the 41% shareholder of Shuya), including the operating rights and use rights of all the assets and equipment in the station. The annual rent is approximately $64,290, to be paid each year in advance, however, it has not been paid since the lease commenced. Effective August 5, 2022, Shuya entered another 48-month lease for leasing sewage treatment land from Leishen to operate the natural gas recycling station. The annual rent is approximately $17,137, to be paid each year in advance, which has not been fully paid since the lease commenced. The components of lease costs, lease term and discount rate with respect of Leishen leases with an initial term of more than 12 months are as the following: Balance sheet information related to the Company’s Leishen operating leases: SCHEDULE OF OPERATING LEASE COST
|  | As of December 31, 2023 |
Right-of-used assets |  | $ | 207,995 |
Lease liabilities – current |  | $ | 229,201 |
Lease liabilities – non-current |  |  | 81,506 |
Total lease liabilities |  | $ | 310,707 |
The weighted-average remaining lease term and the weighted-average discount rate of Leishen leases are as follows:
|  | Year Ended December 31 |
|  | 2023 |  |  | 2022 |
Weighted average remaining lease term (years) |  |  | 2.59 |  |  |  | 3.59 |
Weighted average discount rate |  |  | 5 | % |  |  | 5 | %
The following is a schedule, by year of lease payment for Shuya as of December 31, 2023.
For the 12 months ending |  | Lease Payment |
2024 |  |  | 229,201 |
2025 |  |  | 41,338 |
2026 |  |  | 48,950 |
2027 |  |  | - |
Total undiscounted cash flows |  |  | 319,489 |
Imputed Interest |  |  | (8,782 | )
Present value of lease liabilities |  | $ | 310,707 |
Our lease expense (including both ASC 842 lease and short-term lease) for the years ended December 31, 2023 and 2022 was $401,293 and $349,610 respectively. Severance Benefits Mr. Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Mahdi would have been entitled to receive through the remainder or the Employment Period or One (1) year, whichever is greater.

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