18. GOODWILL AND IDENTIFIABLE INTANGIBLES

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

18. GOODWILL AND IDENTIFIABLE INTANGIBLES

During 2014, we completed the acquisitions of Vapestick, FIN, VIP, and Hardwire. As a result of these acquisitions, we recorded goodwill and certain other identifiable intangible assets. A summary of changes in our goodwill and other intangible assets for the year ended December 31, 2014 is as follows:

Goodwill/Intangibles	Net Balance   as of December 31, 2013		Additions		Translation Adjustment			Valuation loss on Impairment			Periodic Amortization			Net Balance  as of  December 31, 2014
Goodwill	$	-	$	154,481,534	$	(3,431,634	)	$	(94,391,443	)	$	-		$	56,658,457
Tradenames		-		44,036,000		(1,189,973	)		(14,678,050	)		(2,545,161	)		21,832,502
Customer Relationships		-		71,318,000		(1,269,386	)		(35,288,000	)		(7,103,898	)		31,447,030
Domain Name and Website		-		1,235,000		(93,286	)		-			(83,729	)		1,057,985
Non-Compete Agreements		-		420,000		-			-			(64,438	)		355,562
	$	-	$	271,490,534	$	(5,984,279	)	$	(144,357,493	)	$	(9,797,226	)	$	111,351,536

Amortization expenses for the 5 years following December 31, 2014 are approximately as follows: $8,500,000, $7,100,000, $5,400,000, $5,300,000 and $4,500,000.

Impairment

We incurred a $94.4 million loss on impairment of goodwill in 2014. When estimating the fair value of goodwill, we make assumptions regarding revenue growth rates, operating cash flow margins and discount rates. These assumptions require substantial judgment as we operate in a high growth industry and have recently acquired our reporting units.

We consider company specific factors including customers, new products and demand patterns as well as industry information to arrive at these estimates. As of December 31, 2014, we have utilized a 17.5% to 20.0% range of discount rates in determining the loss on impairment. In calculating the discount rate, we considered estimates of the long-term mean market return, industry beta, corporate borrowing rate, average industry debt to capital ratio, average industry equity capital ratio, risk free rate and the tax rate.

We also identified and recognized an impairment loss of approximately $50 million on our identifiable intangibles in 2014.