Right-of-use

assets

January 1, 2019,

the Company adopted ASC Topic

842

using the modified retrospective transition method. Topic

842

requires the recognition of lease assets and liabilities for operating leases, in addition to the finance lease assets and liabilities previously recorded on our consolidated balance sheets. Beginning on

January 1, 2019,

our consolidated financial statements are presented in accordance with the revised policies, while prior period amounts are

not

adjusted and continue to be reported in accordance with our historical policies. The modified retrospective transition method required the cumulative effect, if any, of initially applying the guidance to be recognized as an adjustment to our accumulated deficit as of our adoption date. There is

discount rate implicit in the Anguilla office operating lease agreement, so the Company estimated a

discount rate for the incremental borrowing rate for the lease as of the adoption date,

January 1, 2019.

There is

discount rate implicit in the license agreement, so the Company estimated a

12%

discount rate for the incremental borrowing rate for the licenses as of the adoption date,

January 1, 2019.

Effective

April 1, 2019,

we recognized lease assets and liabilities of

$125,474,

in relation to the Vancouver office. We estimated a discount rate of

4.12%.

There was

cumulative effect adjustment to our accumulated deficit as a result of initially applying the guidance.

We elected the package of practical expedients permitted under the transition guidance within Topic

842,

which allowed us to carry forward prior conclusions about lease identification, classification and initial direct costs for leases entered into prior to adoption of Topic

842.

Additionally, we elected to

not

separate lease and non-lease components for all of our leases. For leases with a term of

months or less, our current offices, we elected the short-term lease exemption, which allowed us to

not

recognize right-of-use assets or lease liabilities for qualifying leases existing at transition and new leases we

may

enter into in the future, as there is significant uncertainty on whether the leases will be renewed.

The right-of-use assets as at

December 31, 2019,

is summarized as follows:

	2019

Initial recognition of operating lease right-of-use assets	$	76,557
Capitalization of operating lease right-of-use assets		125,474
Capitalization of additional license leases		5,299
Amortization of operating lease right-of use assets		(72,416	)
Balance as at December 31, 2019	$	134,914

The operating lease as at

December 31, 2019,

is summarized as follows:

As at December 31, 2019	Operating lease
	Office lease			Brand licenses			Total
2020	$	31,021		$	1,973		$	32,994
2021		32,142			-			32,142
2022		33,263			-			33,263
2023		34,384			-			34,384
2024		7,916			-			7,916
Total lease payments	$	138,726		$	1,973		$	140,699
Less: Interest		(13,066	)		(18	)		(13,084	)
Present value of lease liabilities	$	125,660		$	1,955		$	127,615

Amounts recognized on the balance sheet
Current lease liabilities	$	23,760		$	1,955		$	25,715
Long-term lease liabilities		101,900			-			101,900
Total lease payments	$	125,660		$	1,955		$	127,615

	2019

Initial recognition of operating lease liabilities	$	81,856
Operating lease liability incurred during the year		125,474
Payments on operating lease liabilities		(79,715	)
Balance as at December 31, 2019		127,615
Less: current portion		(25,715	)
Operating lease liabilities – non-current portion as at December 31, 2019	$	101,900

As of

December 31, 2019,

the ROU assets of

$134,914

are included in non-current assets on the balance sheet, and lease liabilities of

$127,615

are included in current liabilities and non-current liabilities on the balance sheet.