Quarterly report pursuant to Section 13 or 15(d)

Unearned Revenue

Unearned Revenue
3 Months Ended
Nov. 30, 2017
Unearned Revenue [Text Block]

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 Territory License fee receipts between the license and the support services. Accordingly, the Company recognizes revenue pro-rated basis over the term of the Licensing agreement. During the three months ended November 30, 2017, the Company recognized $16,250 (Note 13), $6,250 of pro-rated income and $10,000 of additional Licensing Fees. As at November 30, 2017, a total of $10,000 in License Fees are receivable from the Licensee (August 31, 2017 - $Nil).

      November 30     August 31  
      2017     2017  
      $     $  
  Balance – Beginning   17,083     12,500  
  Territorial License fees received   -     30,000  
  Advance payments on product sales   -     4,900  
  Earned revenue   (6,250 )   (30,317 )
  Balance - Ending   10,833     17,083