5. RIGHT-OF-USE ASSET AND LEASE LIABILITY

In 2017, 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 terminated the lease agreement on 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 were included in the calculation of future lease payments.

Right-of-Use Assets
Balance, August 31, 2020	$	403,961
Depreciation		(224,154	)
Foreign currency translation adjustment		10,446
Balance, August 31, 2021	$	190,253
Depreciation		(95,010	)
Termination		(94,210	)
Foreign currency translation adjustment		(1,033	)
Balance, May 31, 2022	$	-


Operating Lease Liabilities
Balance, August 31, 2020	$	457,324
Lease interest expense		28,714
Payments		(270,898	)
Foreign currency translation adjustment		11,838
Balance, August 31, 2021	$	226,978
Lease interest expense		6,036
Payments		(117,548	)
Termination		(114,263	)
Foreign currency translation adjustment		(1,203	)
Balance, May 31, 2022	$	-

During the three and nine months ended May 31, 2022 the Company recorded depreciation expense of $37,726 and $95,010 respectively (May 31, 2021 - $56,376 and $167,468, respectively) which has been allocated between general and administrative, sales and marketing, and product development expenses 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).

As of May 31, 2022, the Company has no outstanding commitments related to the operating lease payments.