I was informed unofficially by Sarah of RVX that the accounting for Royalty Preferred Shares is in compliance with International Financial Reporting Standards.

I had questioned the fact that RVX recorded a liability at 10/31/15 for $30.1 million to Zenith which represents the net present value of future payments to Zenith for Dividends on Royalty Preferred Shares (assumes a 35% probability rate and 24.3% discount rate). Zenith did not report a corresponding receivable at 10/31/15 on its books.

The effect of this accounting treatment is a $30.1million dilution of the book value of RVX with $0 benefit to Zenith. A most conservative approach - the accounting treatment and assumptions are disclosured in Note 7 to the financials of both entities.

As the BetonMace trial unfolds hopefully two things are going to occur.

1) the probability rate of dividend payments to Zenith will increase

2) the time to commencement of revenue will decrease

It will be interesting to see how the Royalty Preferred Shares Liability is valued in the coming quarters - a true reflection of management's estimate of the likelihood of an RVX revenue stream. Also, when the future revenue from Royaly Preferred Shares is recognized by Zenith, the time draws nigh.

I am not familiar with International Accounting Standards but did some research on revenue recognition and found that the International Accounting Standards Board and the Financial Accounting Standards Board recently issued IFRS-15( effective 1/1/2017 with earlier adoption encouraged) which redefines how revenues are recognized and replaces all existing IFRS and US GAAP revenue requirements.

Chicagoest