Quarterly report pursuant to Section 13 or 15(d)

ACQUISITION

v3.8.0.1
ACQUISITION
6 Months Ended
Sep. 30, 2017
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
4.
ACQUISITION
 
On April 21, 2016, the Company acquired 100% of the common and preferred shares of IMT, through a transaction where Bionik Mergerco merged with and into IMT, with IMT surviving the merger as a wholly owned subsidiary of Bionik. Bionik issued an aggregate of 23,650,000 shares of Company Common Stock in exchange for all shares of IMT Common Stock and IMT Preferred Stock outstanding immediately prior to April 21, 2016. All shares have been issued at March 31, 2017.
 
Bionik also assumed each of the 3,895,000 options to acquire IMT Common Stock granted under IMT’s equity incentive plan or otherwise issued by IMT. These options were exchanged for purchase of an aggregate of 3,000,000 shares of Company Common Stock, of which 1,000,000 have an exercise price of $0.25. 1,000,000 have an exercise price of $0.95 and 1,000,000 have an exercise price of $1.05. Stock compensation expense on vested options of $2,582,890 was recorded on the options exchanged and this amount is included in the acquisition equation.
 
As a result of the acquisition of IMT, the Company acquired assets including three licensed patents, two license agreements, three FDA listed products, an FDA inspected manufacturing facility, extensive clinical and sales data, and international distributors. The Company retained an independent valuator to determine the purchase price allocation, which reflects the allocation of assets and goodwill. The following sets forth the purchase price allocation based on management’s best estimates of fair value, including a summary of major classes of consideration transferred and the recognized amounts of assets acquired and liabilities assumed at the acquisition date.
 
 
 
As at
 
 
 
April 21, 2016
 
 
 
$
 
Fair value of 23,650,000 shares of common stock (a)
 
 
23,177,000
 
Fair value of vested stock options (b)
 
 
2,582,890
 
Allocation of purchase price:
 
 
25,759,890
 
Cash and cash equivalents
 
 
266,635
 
Accounts receivable
 
 
6,490
 
Inventories
 
 
188,879
 
Prepaid expenses and other current assets
 
 
16,839
 
Equipment
 
 
59,749
 
Liabilities assumed:
 
 
 
 
Accounts payable
 
 
(241,299)
 
Accrued liabilities
 
 
(361,029)
 
Customer deposits
 
 
(86,487)
 
Demand notes payable
 
 
(324,894)
 
Promissory notes payable
 
 
(217,808)
 
Bionik advance (c)
 
 
(1,436,164)
 
Net assets acquired
 
 
(2,129,089)
 
Patents and exclusive License Agreement
 
 
1,306,031
 
Trademark
 
 
2,505,907
 
Customer relationships
 
 
1,431,680
 
Non compete agreement
 
 
61,366
 
Assembled Workforce
 
 
275,720
 
Goodwill
 
 
22,308,275
 
 
 
 
25,759,890
 
 
(a)
The fair value of common stock was based on $0.98, which was the closing market price of the Company’s common stock on April 21, 2016.
 
(b)
The fair value of the vested stock options was determined using the Black Scholes option pricing model with the following key assumptions: a risk free rate of 1.59%, dividend and forfeiture rates of 0% and expected volatility of 114% which is consistent with the Company’s assumptions (Note 11).
 
(c)
Included in the net assets acquired was a loan issued to IMT in the amount of $300,000 under normal commercial terms. The loan carried an interest rate of 6% and were secured by all the assets of IMT subject to a $200,000 subordination to a third party financial services company, which was released in April 2016.
 
The schedule below reflects the intangible assets acquired in the IMT acquisition and the assets amortization period and expense for the three and six months period ended September 30, 2017 and the year ended March 31, 2017:
 
Intangible assets acquired
 
Amortization
 
 
 
 
 
Expense March
 
 
Value at March
 
 
3 Months Expense
 
 
6 Months Expense
 
 
Value at
 
 
 
period (years)
 
 
Value acquired
 
 
31, 2017
 
 
31, 2017
 
 
September
 
 
September
 
 
September
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30, 2017
 
 
30, 2017
 
 
30, 2017
 
 
 
 
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
Patents and exclusive License Agreement
 
 
9.74
 
 
 
1,306,031
 
 
 
126,375
 
 
 
1,179,656
 
 
 
33,522
 
 
 
67,081
 
 
 
1,112,575
 
Trademark
 
 
Indefinite
 
 
 
2,505,907
 
 
 
-
 
 
 
2,505,907
 
 
 
-
 
 
 
-
 
 
 
2,505,907
 
Customer relationships
 
 
10
 
 
 
1,431,680
 
 
 
134,931
 
 
 
1,296,749
 
 
 
35,792
 
 
 
71,622
 
 
 
1,225,127
 
Non compete agreement
 
 
2
 
 
 
61,366
 
 
 
28,918
 
 
 
32,448
 
 
 
7,671
 
 
 
15,367
 
 
 
17,081
 
Assembled Workforce
 
 
1
 
 
 
275,720
 
 
 
259,856
 
 
 
15,864
 
 
 
-
 
 
 
15,864
 
 
 
-
 
 
 
 
 
 
 
 
5,580,704
 
 
 
550,080
 
 
 
5,030,624
 
 
 
76,985
 
 
 
169,934
 
 
 
4,860,690