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Intangible Assets
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12 Months Ended | ||||||||||||||||||||||||
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Dec. 31, 2014
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||
| Intangible Assets |
NOTE 7 – INTANGIBLE ASSETS
Intangible Assets
In November 2013, the Company entered into a Distribution Agreement with E-motion Apparel, Inc., which designs women’s apparel and accessories. The agreement grants Bitzio the exclusive worldwide right to distribute E-motion Apparel’s products using the E-motion Apparel trademarks, copyrights and trade dress. The agreement also provides that Bitzio will make a five year non-interest-bearing $75,000 working capital loan to E-motion Apparel, and will pay a license fee of $300,000 to E-motion Apparel. The Distribution Agreement was replaced by the acquisition agreement on July 18, 2014.
On July 16, 2014, we entered into a sales purchase agreement in 100% acquisition of all outstanding shares of Lexi Luu. Designs. Bitzio paid 500,000,000 restricted commons shares for this acquisition. Lexi Luu shareholders are able to earn an additional $300,000 in restricted common shares over the course of years in an earn out upon hitting certain revenue benchmarks. We accounted for the transaction as an equity purchase. Of the purchase price paid as of July 16, 2014 ($183,629) was allocated among the assets and liabilities and difference was taken to intangible assets in amount of $690,629. As of December 31, 2014, the net carrying amount is $57,354 This intangible assets will be amortized over life of 2 years, estimated amortization expense for 2015 and 2016 are $37,118 and $20,236 respectively.
On July 18, 2014, we entered into a sales purchase agreement in 100% acquisition of all outstanding shares of E-motion Apparel. Designs. Bitzio paid 350,000,000 restricted commons shares for this acquisition. E-motion Apparel shareholders are able to earn an additional $300,000 in restricted common shares over the course of years in an earn out upon hitting certain revenue benchmarks. We accounted for the transaction as an equity purchase. Of the purchase price paid as of July 18, 2014 ($26,235) was allocated among the assets and liabilities and difference was taken to intangible assets in amount of $74,235. As of December 31, 2014, the net carrying amount is $531,690 This intangible assets will be amortized over life of 2 years, estimated amortization expense for 2015 and 2016 are $354,314 and $186,376 respectively.
Amortization of intangible assets is computed using the straight-line method and is recognized over the estimated useful lives of the intangible assets. Amortization expense was $209,085 and $7,069 for the years ended December 31, 2014 and 2013, respectively.
Estimated amortization expense for the intangible assets for the next five years consists of the following:
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