INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2016

INTANGIBLE ASSETS [Text Block]

NOTE 3 – INTANGIBLE ASSETS

On February 12, 2016, the Company signed the eleventh amendment to its Licensing Agreement with Nanotech Industries, Inc. (“NTI”), whereby the parties amended the Licensing Agreement (and subsequent amendments) to extend the exclusivity period to December 31, 2020 (“2020 Extended Exclusivity Period”). In consideration for the 2020 Extended Exclusivity Period, the Company shall pay the following to NTI:

i)	Issue 11,200 shares of Series B Preferred Stock (“Series B Preferred Shares”) to be issued at the time of execution of the Eleventh Amendment Agreement (“Share Issuance Deadline”).
ii)	Issue purchase warrants to purchase 156,500 shares of Series B Preferred Stock (“ 90 -Day Warrants”), to be issued 90 days following the execution of the amendment (“ 90 -Day Deadline“). The 90 -Day Warrants shall be exercisable at any time from the date of issuance at a price per share equal to the par value of the Series B Preferred Stock of $313,000 and shall expire ten years from the date of issuance.
iii)	Issue purchase warrants to purchase 630,000 shares of Series B Preferred (“ 12 -Month Warrants”), to be issued 12 months following the execution of this Agreement (“ 12 -Month Deadline”). The 12 -Month Warrants shall be exercisable at any time from the date of issuance at a price per share equal to the par value of the Series B Preferred Stock and shall expire ten years from the date of issuance.
	(The “ 90 -Day Warrants” and the 12 -Month Warrants” collectively referred to as the “Warrants”).
iv)	Pay the Licensor an amount equal to US $1,500,000, to be paid within twelve months of the execution of this Eleventh Amendment Agreement and recorded on the balance sheet as note payable - related party as of March 31, 2016 (“Fee Deadline”).

Should the Company not meet any of: (i) the Share Issuance Deadline; or (ii) the 90 -Day Deadline; or (iii) the 12 -Month Deadline; or (iv) the Fee Deadline (individually referred to as “Unmet Deadline”) and should such Unmet Deadline not be extended by the Parties, the Company shall continue to have the right to the Manufacturing and Sale for the Territory, on a non-exclusive basis for the duration of the Agreement. The Company valued the Series B Preferred Stock and Warrants at $502,104 along with a note payable of $1,500,000. Both the 90 -Day Warrants and 12 -Month Warrants have been issued.

Intangible assets activity is as follows for the nine months ended September 30, 2016 and 2015:

		2016			2015
Net intangible assets, beginning of period	$	1,132,753		$	2,136,205
Purchases		2,002,104			420
Less: current amortization		(541,738	)		(796,704	)
Net intangible assets, end of period	$	2,593,119		$	1,339,921

The balance of intangible assets, net is as follows:

		September 30, 2016			December 31, 2015
Intangible assets	$	6,504,584		$	4,502,480
Less impairment and transfer		(781,917	)		(781,917	)
Less: accumulated amortization		(3,129,548	)		(2,587,810	)
Intangible assets, net	$	2,593,119		$	1,132,753

During the three months ended September 30, 2016 and 2015, the Company recognized amortization expense of its intangible assets of $158,440 and $265,611, respectively. During the nine months ended September 30, 2016 and 2015, the Company recognized amortization expense of its intangible assets of $541,738 and $796,704, respectively.

The following is a summary of the licenses acquired to date from NTI:

	License Rights Overview	Licensed Region	Term (date) of License	Original Cost	Carrying Value at September 30,   2016	Carrying Value at December 31, 2015
A	Coating Products	North America	12-Jun-10 10 years, 6 months	$500,000	$0	$0
B	Coating Products	Russian Territory	17-Mar-11 9 years, 9 months	$150,000	$21,041	$24,800
C	Coating Products	European Continent	07-Jul-11 9 years, 5 months	$1,250,000	$97,390	$129,020
D	Spray Foam Insulation	North America, European Continent and Russian Territory	06-May-16 4 years, 7 months	$500,000	$49,227	$86,865
E	Added Applications including synthetic leather, sealants and adhesives	North America, European Continent and Russian Territory	31-Mar-17 3 years, 9 months	$2,000,000	$656,002	$833,333
F	Polyurethane Foam Packaging	North America	10-Aug 15 5 years, 4 months	$102,480	$39,404	$58,735
G	Extension	All Territories and Products	31-Dec -20 5 years	$2,002,104	$1,730,055	$0
TOTAL				$6,504,584	$2,593,119	$1,132,753