Quarterly report pursuant to Section 13 or 15(d)

Acquisition of Patents

v3.7.0.1
Acquisition of Patents
 9 Months Ended
Feb. 28, 2017
Acquisition of Patents

Note 7 – Acquisition of Patents

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 February 28, 2017, 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 clinical 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:

 

     February 28, 2017      May 31, 2016  

Gross carrying amounts

    $ 3,500,000      $ 3,500,000  

Accumulated amortization

      (1,531,250 )       (1,268,750 ) 
  

 

 

     

 

 

  

Total amortizable intangible assets, net

      1,968,750        2,231,250  

Patents currently not amortized

      35,989        35,989  
  

 

 

     

 

 

  

Carrying value of intangibles, net

    $ 2,004,739      $ 2,267,239  
  

 

 

     

 

 

  

Amortization expense related to patents was approximately $87,500 and $262,500 for the three and nine months ended February 28, 2017 and February 29, 2016. 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.