Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Intangible Assets

Note 6 - Intangible Assets
9 Months Ended
May 31, 2017
Note 6 - Intangible Assets



On May 3, 2017, the Company acquired a web domain and $26,716 of inventory from RUB Acquisition, LLC (“Seller”) in exchange for cash consideration of $150,000 and 200,000 restricted shares of the Company’s common stock. During the one-year period following the closing, the Seller may become entitled to receive up to an additional $100,000 in cash and 400,000 shares of common stock of the Company if certain contingent milestones are achieved.  The Company accounted for the contingent consideration based upon a probability-weighted assessment of the occurrence of triggering events outlined in the asset purchase agreement. The Company recorded a contingent liability for the contingent cash consideration of $50,000 and recorded contingent equity consideration of $466,000. The fair value of the contingent equity consideration is recorded in additional paid in capital. The fair value of the equity consideration issued at closing and the fair value of the contingent equity consideration was based on the closing price of the Company’s stock on May 3, 2017, which was $2.33.


The total preliminary asset acquisition consideration used in preparing the unaudited condensed consolidated financial statements is as follows:


Asset Acquisition Consideration:


   $               150,000

Fair value of common shares issued to seller


Estimated fair value contingent cash consideration


Estimated fair value contingent equity consideration


Total estimated acquisition consideration

   $           1,132,000



The following table summarizes the allocation of the fair values of the assets acquired:



   $                 26,716

Finite-lived intangible assets:

     Domain name


Net assets acquired


Total fair value of consideration

   $           1,132,000


The Company determined that the web domain has an estimated useful life of five (5) years. Accordingly, amortization expense of $18,421 was recorded for the three-month period ended May 31, 2017 and is included in depreciation and amortization expense on the unaudited condensed consolidated statements of operations.