PhytaLab Update:
As at September 30, 2015, Impairment of Intangible Assets includes:
· Phytalytics LLC. (Phytalab). Phytalab operated and generated revenue in the 2015 period. Recent estimates by the
Washington State Licensing Board indicate that Phytalab held the 3rd largest market share of analytical testing
services in the Washington State with 9% market share. Despite this success and shareholder loans to Phytalab
totaling $390,532 for the year ending September 30, 2015, revenues did not sufficiently cover operating expense.
With Abattis’ focus on revenue generation through product sales, the Company elected to temporarily suspend
operations in October 2015 to prevent further financial losses. Assets were consolidated with Abattis. The
analytical license remains valid and a State re-inspection will be required if and when operations resume in a new
location. To establish a highly conservative fair value for this cash generating unit, the following was considered:
o Recent offers to purchase: Abattis has received offers from three separate parties to purchase 100%
interest in Phytalab. All offers were for approximately $200,000, to include the physical assets that have a
carrying value of $70,000.
o For comparison, the estimated cost to apply for a new license by a qualified applicant in the State of
Washington at present time is approximately $50,000 to $100,000. In addition, once a new application is
submitted, the applicant will wait 6-18 months to obtain approval prior to operations commencing, if they
are successful in obtaining a license.
o Phytalab possesses immediate access to a book of business that will generate revenue upon
recommencement of operations. Very conservatively, the minimum revenue that could be generated by
Phytalab in a 6-month period of time is $45,000 based on historical revenue and existing book of business.
o The fair value for Phytalab was determined by averaging the minimum amounts above to arrive at a value
of $75,000.
