LEASES

6 Months Ended

Feb. 28, 2021

On February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The ASU introduces a new leasing model for both lessees and lessors. Topic 842 provides guidance in how to identify whether a lease arrangement exists. Management has evaluated its leasing arrangements and has classified these as operating leases. Additionally, the lease terms of each of our office leases are short term in nature, however, the Company elected to apply ASC Topic 842 to these leases, because we intend to renew each lease for terms longer than 12 months. As a result of the adoption of ASC Topic 842, the Company recognized a right-of-use asset and operating lease liabilities of $250,066 based on the present value of the minimum rental payments utilizing a discount rate of 2.19%.

Operating Lease Obligations

On August 01, 2019, the Company entered into an office lease for a six-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OnCoWork. The lease calls for rent payments of €2,340 plus VAT in monthly payments. The lease began August 1, 2019, is month to month with a six-month permanency clause, of which management intends to renew.

On December 01, 2019, the Company entered into an office lease for a nine-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €3,120 plus VAT in monthly payments. The lease began December 1, 2019, is month to month with a six-month permanency clause, of which management intends to renew.

On April 20, 2020, the Company entered into an office lease for a six-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €2,550 plus VAT in monthly payments. The lease began April 20, 2020 is month to month with a six-month permanency clause, of which management intends to renew.

The Company has recorded operating lease expense in the amount of $64,512 during the six months ended February 28, 2021 and $0 for the three months ended February 28, 2020. As of February 28, 2021, and August 31, 2020, the discount rate for these leases is 2.19% and the weighted average remaining term is 9 months.

Future minimum operating lease payments consist of:

2021	$	104,094
2022		7,653
2023		0
Total minimum lease payments		111,747
Less: present value discount		(599	)
Present value of minimum lease payments		111,148
Current portion of operating lease obligation		103,495
Operating Lease obligation, less current portion	$	7,653

BOATIM INC. 10-Q