Quarterly report pursuant to Section 13 or 15(d)

Acquisition of Patents

Acquisition of Patents
3 Months Ended
Aug. 31, 2018
Acquisition of Patents

Note 7 – Acquisition of Patents

As discussed in Note 9 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, 2018, 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 2031 and 2038, respectively, in various countries.


The following presents intangible assets activity:


     August 31, 2018      May 31, 2018  

Gross carrying amounts

   $ 3,500,000      $ 3,500,000  

Accumulated amortization

     (2,056,365      (1,968,846







Total amortizable intangible assets, net

     1,443,635        1,531,154  

Patents currently not amortized

     35,989        35,989  







Carrying value of intangibles, net

   $ 1,479,624      $ 1,567,143  







Amortization expense related to acquired patents was approximately $87,500 for the three months ended August 31, 2018 and 2017, 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 approximately the next four years.