Quarterly report pursuant to Section 13 or 15(d)

Unearned Revenue

Unearned Revenue
6 Months Ended
Feb. 28, 2018
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 were a separate deliverable under the licensing agreement. As the support services are not to be sold on a stand-alone basis, the Company was 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 recognized revenue on a pro-rated basis over the term of the Licensing agreement. The Company has since determined that the support services form an insignificant portion of the licensing contract as they are primarily completed prior to delivery of the technology and that delivery of the license is complete when the Technology is transferred to the Licensee. During the six month period ended February 28, 2018, the Company recognized $17,083 (Note 13), of unearned revenue.

      February 28     August 31  
      2018     2017  
      $     $  
  Balance – Beginning   17,083     12,500  
  Territorial License fees received   -     30,000  
  Advance payments on product sales   -     4,900  
  Earned revenue   (17,083 )   (30,317 )
  Balance - Ending   -     17,083