Purchase of Reliv Distributorship

12 Months Ended

Dec. 31, 2011

Purchase Of Reliv Distributorship [Abstract]

Purchase Of Reliv Distributorship [Text Block]

13. Purchase of Reliv Distributorship

On August 31, 2009, the Company acquired an independent Reliv distributorship from its owner for an aggregate purchase price of $2,060,000. The Company paid $500,000 of the purchase price to the owner at closing, credited the owner’s $216,119 outstanding loan balance due to the Company, and agreed to pay the balance of the purchase price, $1,343,881, over a period of seven years, plus interest at an annual rate of 5%, with monthly payments of principal and interest totaling $18,994. As a condition to the transaction, the contract contained a non-compete clause of two years and non-solicitation clause of Company distributors for a term of seven years.

The Company allocated the purchase price to its components based on the relative fair values of assets acquired, accounting for the acquisition of the distributorship as an intangible asset with an estimated value of $1,648,000 and useful life of fifteen years. For the non-compete provision and non-solicitation provision, the Company allocated $103,000 and $309,000 respectively, based upon these assets relative fair value estimates and their respective contractual terms.

The distributorship, non-compete, and non-solicit assets, net of accumulated amortization, are presented as “Intangible assets, net” in the accompanying consolidated balance sheets and are subject to review for potential impairment going forward.

The Company had amortizable intangible assets as follows as of December 31, 2011 and 2010:

	Gross Carrying Amount				Accumulated Amortization
	2011		2010		2011		2010
Distributorship	$	1,648,000		1,648,000	$	256,356		146,489
Non-compete agreement		103,000		103,000		103,000		68,667
Non-solicitation agreement		309,000		309,000		103,000		58,857
	$	2,060,000		2,060,000	$	462,356		274,013

Amortization expense (straight-line method) for intangible assets totaled $188,343 and $205,510 in 2011 and 2010, respectively. Amortization expense for amortizable intangible assets over the next five years is estimated to be:

	Intangible
	Amortization
2012	$	154,000
2013		154,000
2014		154,000
2015		154,000
2016		139,000