Annual report pursuant to Section 13 and 15(d)

Intangible Asset, Net

v3.19.1
Intangible Asset, Net
12 Months Ended
Dec. 31, 2018
Disclosure of Intangible Asset Net [Abstract]  
Intangible Asset, Net
Note 9 — Intangible Asset, Net
 
 
 
December 31,

2018
 
 
December 31,

2017
 
 
 
 
 
 
 
 
Intangible Asset
 
$
1,500,000
 
 
$
 
Less: Accumulated Amortization
 
 
(102,000
)
 
 
 
 
 
 
 
 
 
 
 
 
Intangible Asset, Net
 
$
1,398,000
 
 
$
 
 
On October 4, 2018, the Company entered into amendment No. 1 to agreements (the “TDG Amendment”), with TDG Acquisition Company, LLC (“TDG”), aka Six15 
Technologies, LLC
. The TDG Amendment amends certain provisions of prior agreements between Vuzix and TDG, including an asset purchase agreement dated June 15, 2012, and an authorized reseller agreement dated June 15, 2012.
 
Pursuant to the TDG Amendment, the Company will be permitted to engage in sales of heads-up display components or subsystems (and any services to support such sale) for incorporation into a finished good or system for sale to military organizations, subject to certain conditions. The Company will also be permitted to sell its products to defense and security organizations that include business customers and governmental entity customers that primarily provide security and defense services, including police, fire fighters, EMTs, other first responders, and homeland and border security. The Company will owe TDG commissions with respect to all such sales until June 2022.
 
Pursuant to the TDG Amendment, the Company agreed to pay to TDG $1,500,000, as follows: (a) $750,000, within three (3) days after the date of the TDG Agreement; (b) $500,000, on or before January 4, 2019; and (c) $250,000, on or before April 5, 2019. As of December 31, 2018, there was $750,000 in accrued current liabilities for the remaining 2019 payments.
 
This reacquired right covers the entire remaining term of the original non-compete agreement with TDG, which expires June 15, 2022. The capitalized cost of this reacquired right will be amortized over 
44 
months. Total amortization expense for this intangible asset for the year ended December 31, 2018 was $102,000.