Intangible Assets

3 Months Ended

Mar. 31, 2016

7.	Intangible Assets

In June 2014, Papernuts acquired the rights to the Papernuts trademark for $75,000. Terms of the agreement are as follows:

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Upon signing the agreement and paying $20,000 (paid in July 2014), the Company received the temporary right to use the Papernuts name and trademark, provided Papernuts comply with certain insurance and other requirements as stipulated by the vendor.

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Upon payment of an additional $55,000, required to be paid by September 15, 2014 (and paid on that date), Papernuts received permanent use and ownership of the Papernuts name, web domain and any trademarks, patents and rights to sell Papernuts products in the US and Canada.

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Papernuts is required to pay a royalty of 2% of sales of Papernuts products, to a maximum of $100,000.

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As part of this agreement, should Papernuts and the vendor not be able to negotiate a distribution contract in the future, Papernuts would be required to acquire certain of the vendor’s inventory and equipment valued at $40,000 (paid in March, 2015). Papernuts has recorded an impairment charge of $35,000 in December, 2014 with respect to this inventory.

Papernuts recorded amortization of $7,377 relating to this asset during the year ended December 31, 2015. The remaining balance of $62,697 was fully written off in 2015 due to the uncertainty of the future benefit that the Company will be able to realize.

AXIOM CORP. 10-Q