Annual report pursuant to section 13 and 15(d)

INTANGIBLE ASSETS

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INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2013
Notes to Financial Statements  
INTANGIBLE ASSETS

Intangible assets consisted of the following at December 31, 2013 and 2012:

 

  2013   2012
Patents $ 13,615,967     $ 13,615,967  
Customer relationships   3,400,000       3,400,000  
Trademarks   2,740,000       2,740,000  
Non-compete agreements   660,000       660,000  
Territory rights   —         150,000  
    20,415,967       20,565,967  
Less: accumulated amortization   (3,604,456 )     (2,015,551 )
   Intangible assets, net $ 16,811,511     $ 18,550,416  

 

Included in amortization expense was $1,588,905 and $1,564,969 related to the above intangible assets for the years ended December 31, 2013 and 2012, respectively.

 

Included in intangible assets at December 31, 2012 are territory rights of $150,000, which are the result of a 2008 purchase from an outside sales representative to sell and distribute in the State of California. The purchase price was fully allocated to territory intangible assets and assigned an indefinite life. As of September 2013, we discontinued our business relationship with tribal casinos in California as a result of a notice received from the California Bureau of Gambling Control. See Note 11 for details regarding the California administrative action. Due to the exit from California, we recorded a $150,000 impairment charge to reduce the carrying value of the intangible asset to its estimated fair value during 2013.