v2.4.0.6
Note 6 - Acquisition
 12 Months Ended
Dec. 31, 2012
Business Combination Disclosure [Text Block]
NOTE 6 – ACQUISITION

On January 10, 2012, the Company, through a newly-formed wholly-owned subsidiary (EVT) entered into an asset purchase agreement with Moda for Friends LLC (the “Seller”) and purchased certain intangible assets that included a contractual-related agreement, purchased customer list, developed technologies and trademarks (the “Acquired Intangible Assets”) owned by the Seller for a total purchase price of $600,000 plus transaction costs of $11,000. The Company paid the purchase price through the issuance of 285,714 shares of its Common Stock, with each share being valued at $2.10 (the closing price of the Common Stock on the day prior to the consummation of the transaction).  The Company completed the asset acquisition because it would facilitate the launch and operation of its own flash sales business.

The Company has allocated the total purchase price plus transactions costs of the acquisition among the assets, based on their relative fair values, as follows:

         
Contract-related intangible
 
$
428,000
 
Developed technology-related intangible
   
111,000
 
Customer-related intangible
   
62,000
 
Tradename
   
10,000
 
Total purchase price plus transaction costs
 
$
611,000
 

The carrying values of the Acquired Intangible Assets at December 31, 2012 were as follows:

 
Weighted
Average
Useful Life
(Years)
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Amount
Contract-related intangible
5
 
$
428,000
   
$
(428,000
)
 
$
--
 
Customer-related intangible
2
   
62,000
     
(62,000
)
   
--
 
Developed technology-related intangible
1
   
111,000
     
(111,000
)
   
--
 
Tradename
1
   
10,000
     
(10,000
)
   
--
 
Total intangible assets, net
   
$
611,000
   
$
(611,000
)
 
$
--
 

As of December 31, 2012, the Acquired Intangible Assets were deemed to be impaired and the fair value was determined to be zero (Level 3 in the fair value hierarchy) due to the Company's potential inability to meet its obligations under the terms and conditions of the contract given the Company's current limited financial resources.

For the year ended December 31, 2012, the Company recorded $611,000 including $383,000 of impairment loss in total amortization expense in the Consolidated Statement of Operations related to the Acquired Intangible Assets.