DEFERRED REVENUE

9 Months Ended

Sep. 30, 2014

DEFERRED REVENUE.

DEFERRED REVENUE.

NOTE 10 – DEFERRED REVENUE

Our deferred revenue consists of:

	September 30,2014		December 31,2013
Deferred revenue – WeedMD	$	818,750	$	—
Deferred revenue - Om of Medicine, LLC		45,000		—
Deferred revenue - OM of Illinois, LLC		99,000		—
Less – current portion		(444,000)		—
Total equity method investments	$	518,750	$	—

As described in Note 4 above, on May 30, 2014, we received 1,187,500 common shares and 3,000,000 warrants to purchase common shares of WMD in exchange for future consulting services and use of our intellectual property. We recorded the $893,750 fair value of these securities as deferred revenue and, based on discussions with WMD, we expect to deliver consulting services and use of our intellectual property to WMD on a consistent monthly basis during a three year period beginning June 1, 2014. Accordingly, we began recognizing $25,000 of deferred revenue per month totaling $75,000 during the three and nine months ending September 30, 2014. At September 30, 2014, we expect to recognize $300,000 of the $818,750 WMD deferred revenue during the next twelve months and accordingly, we have classified the $300,000 as a current liability on our condensed balance sheets.

As described in Note 7 above, on August 15, 2014 and August 31, 2014, we acquired a 15% and 33% membership interest in Om of Medicine, LLC and OM of Illinois, LLC, respectively, in return for a commitment to provide $144,000 of future services to these entities. As of September 30, 2014, the Oms did not have any operations or operating activities; however, we expect to satisfy our future service obligations during the next twelve months and accordingly, we have classified the $144,000 as a current liability in our condensed balance sheets.