Quarterly report pursuant to Section 13 or 15(d)

Acquisition of Patents

v3.5.0.2
Acquisition of Patents
 3 Months Ended
Aug. 31, 2016
Acquisition of Patents

Note 7 – Acquisition of Patents

As discussed in Note 8 below, the Company consummated an asset purchase on October 16, 2012, and paid $3,500,000 for certain assets, including intellectual property, certain related licenses and sublicenses, FDA filings and various forms of the PRO 140 drug substance. The Company followed the guidance in Financial Accounting Standards Topic 805 to determine if the Company acquired a business. Based on the prescribed accounting, the Company acquired assets and not a business. As of August 31, 2016, the Company has recorded and is amortizing $3,500,000 of intangible assets in the form of patents. The Company estimates the acquired patents have an estimated life of ten years. Subsequent to the acquisition date, the Company has continued to expand, amend and file new patents central to its current trial strategies, which, in turn, have extended the protection period for certain methods of using PRO 140 and formulations comprising PRO 140 out through at least 2026 and 2031, respectively, in various countries.

 

The following presents intangible assets activity:

 

     August 31, 2016      May 31, 2016  

Gross carrying amounts

    $ 3,500,000       $ 3,500,000   

Accumulated amortization

      (1,356,250 )       (1,268,750 ) 
  

 

 

     

 

 

  

Total amortizable intangible assets, net

      2,143,750         2,231,250   

Patents currently not amortized

      35,989         35,989   
  

 

 

     

 

 

  

Carrying value of intangibles, net

    $ 2,179,739       $ 2,267,239   
  

 

 

     

 

 

  

Amortization expense related to patents was approximately $87,500 for the three months ended August 31, 2016 and 2015. The estimated aggregate future amortization expense related to the Company’s intangible assets with finite lives is estimated at approximately $350,000 per year for the next five years.