5. CONTRACTS PAYABLE

9 Months Ended

May 31, 2020

Other Liabilities Disclosure [Abstract]

CONTRACTS PAYABLE

NOTE 5: CONTRACTS PAYABLE

DILIsym Acquisition Liabilities:

On June 1, 2017, the Company acquired DILIsym Services, Inc. The agreement provided for a working capital adjustment, an eighteen-month $1,000,000 holdback provision against certain representations and warrantees, and an Earn-out agreement of up to an additional $5,000,000 in Earn-out payments based on earnings over the next three years. The Earn-out liability has been recorded at an estimated fair value. Payments under the Earn-out liability started in FY 2019. In September 2018, $1,556,644 was paid out under the first earn-out payment, a second earn-out payment was made in August 2019 in the amount of $1,682,329. It is estimated that a final payment of approximately $1,761,028 will be paid in August 2020.

Lixoft Acquisition Liabilities:

On April 1, 2020, the Company acquired Lixoft. The agreement provided for a twenty-four month $2,000,000 holdback provision against certain representations and warrantees, comprised of $1,333,333 of cash and the release from an escrow shares of stock valued at $666,337 issued at the date of the Agreement. In addition, based on a revenue growth formula for the two years subsequent to April 1, 2020, the agreement calls for earn-out payments up to $5,500,000 (two thirds cash and one-third newly issued, unregistered shares of the Company’s common stock). The former shareholders can earn up to $2,000,000 the first year and $3,500,000 in year two.

As of May 31, 2020 and August 31, 2019 the following liabilities have been recorded:

	May 31, 2020		August 31, 2019
Holdback Liability - Lixoft	$	1,333,333	$	–
Earn-out Liability - Lixoft		4,609,000		–
Earn-out Liability - Dilisym		1,761,028		1,761,028
Sub Total	$	7,703,361	$	1,761,028
Less: Current Portion		3,761,028		1,761,028
Long-Term	$	3,942,333	$	–