Annual report pursuant to Section 13 and 15(d)

Unearned Revenue

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Unearned Revenue
 12 Months Ended
Aug. 31, 2017
Unearned Revenue [Text Block]
9.

Unearned Revenue

   
 

On May 14, 2016, the Company entered into a licensing agreement (the “Licensing Agreement”) with an arm’s length party (the “Licensee”) allowing the Licensee, for a two-year period, to utilize the Company’s Technology to create, test, manufacture, and sell marijuana-infused consumable and/or topical products, in the state of Colorado, with an option of extending the terms of the Licensing Agreement to Washington, Oregon, and California (the “Territorial License”). In addition to the granting of the license, the Company is required to provide support services to the Licensee in connection with the use of the Company’s Technology during the term of the Licensing Agreement.
   
 

The Company determined that the provision of the support services is a separate deliverable under the Licensing Agreement. As the support services will not be sold on a stand-alone basis, the Company is unable to establish a vendor-specific objective evidence of fair value of such services to be able to objectively allocate the Territorial License fee receipts between the license and the support services. Accordingly, the Company recognizes revenue ratably over the term of the Licensing Agreement. As of August 31, 2017, the Company had received the full $50,000 of the Territory License Fee. During the year ended August 31, 2017, $25,417 was recognized as revenue (Note 13) with the remaining $17,083 deferred for recognition in future periods.


      August 31     August 31  
      2017     2016  
      $     $  
  Balance – Beginning   12,500     -  
  Territorial License fees received/receivable (Note 6)   30,000     20,000  
  Advance payments on product sales   4,900     -  
  Earned revenue (Note 13)   (30,317 )   (7,500 )
  Balance – Ending   17,083     12,500