Quarterly report pursuant to Section 13 or 15(d)

Acquisition of patents

Acquisition of patents
6 Months Ended
Nov. 30, 2014
Acquisition of patents

Note 10—Acquisition of patents

As discussed in Note 9 above, 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 Board 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 November 30, 2014, the Company has recorded $3,500,000 of intangible assets in the form of patents. The Company estimates the patents have a remaining life of approximately eight years; however, it continues to explore ongoing opportunities to prolong the patent protection period.

As of the date of this filing, management cannot reasonably estimate the likelihood of paying the milestone payments and royalties described in Note 9 and, accordingly, as of November 30, 2014, the Company has not accrued any liabilities related to these contingent payments, as more fully described above in Note 9.


The following presents intangible assets activity:


     November 30, 2014     May 31, 2014  

Gross carrying amounts

   $ 3,500,000      $ 3,500,000   

Accumulated amortization

     (743,750     (568,750







Total amortizable intangible assets, net

     2,756,250        2,931,250   

Patents currently not amortized

     35,989        35,989   







Carrying value of intangibles, net

   $ 2,792,239      $ 2,967,239   







Amortization expense related to patents was $87,500 and 175,000 for the three and six month periods ended November 30, 2014 and 2013, respectively. 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 seven years and approximately $306,000 during the last year of their life.