5. RIGHT OF USE ASSET

The Company entered into a lease agreement commencing July 1, 2017 and expiring June 30, 2022 consisting of approximately 6,600 square feet of office space. The Company mutually ended the lease agreement early effective January 31, 2022.

On adoption of ASC 842, Lease Accounting, the Company recognized right-of-use assets and a corresponding increase in lease liabilities, in the amount of $671,911 which represented the present value of future lease payments using a discount rate of 8% per year. Property tax and insurance payments paid to the lessor are included in the calculation of future lease payments.

Right of Use Asset Continuity	February 28, 2022		August 31, 2021
	$		$
Balance, September 1	190,253		403,961
Depreciation	(95,010	)	(224,154	)
Exit of Operating Lease	(94,210	)	-
Foreign Currency Translation Adjustment	(1,033	)	10,446
Balance, End of Period	-		190,253

The Company has operating lease payments committed as follows:

					$
2022					-
Total lease payments payable					-
Less amounts representing interest					-
Total Operating Lease Liability					-
Less current portion of operating lease liability					-
Long term portion of operating lease liability					-

Operating Lease Liability Continuity	February 28, 2022		August 31, 2021
	$		$
Balance, September 1	226,978		457,324
Less Lease Payments	(117,548	)	(270,898	)
Interest	6,036		28,714
Exit of Operating Lease	(114,263	)	-
Foreign Currency Translation Adjustment	(1,203	)	11,838
Balance, End of Period	-		226,978

During the three and six-month periods ended February 28, 2022 the Company recorded depreciation expense of $37,726 and $95,010 respectively (2021: $56,455 and $111,091) which has been allocated between general and administrative expenses, research and development and sales and marketing on the consolidated statement of comprehensive income (loss). The total rent commitment, net of the leasehold improvement allowance, was amortized to rent expense on a straight-line basis over the term of the lease. On January 31, 2022, upon exit of the lease a gain of $20,053 was recognized in the statement of comprehensive income (loss).