Quarterly report pursuant to Section 13 or 15(d)

Intangible Asset, Net

v3.20.2
Intangible Asset, Net
6 Months Ended
Jun. 30, 2020
Intangible Asset, Net  
Intangible Asset, Net

Note 7 – Intangible Asset, Net

    

June 30, 

    

December 31, 

2020

2019

Intangible Asset

$

1,500,000

$

1,500,000

Less: Accumulated Amortization

 

(724,090)

 

(510,000)

Intangible Asset, Net

$

775,910

$

990,000

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 15, 2022, when the amendment and original non-compete agreements expire, after which the Company will be free to sell any product to any customer world-wide with no commission liability to TDG.

Total commissions expense under this agreement for the three months ended June 30, 2020 and 2019 was $140,364 and nil, respectively. Total commissions expense under this agreement for the six months ended June 30, 2020 and 2019 was $176,944 and nil, respectively. All commissions expense related to this agreement are included in Selling and Marketing expense.

Total amortization expense for this intangible asset for the three months ended June 30, 2020 and 2019 was $112,090 and $102,000. Total amortization expense for this intangible asset for the six months ended June 30, 2020 and 2019 was $214,090 and $204,000. Future monthly amortization expense for the next 23 months is approximately $34,000 per month or $408,000 per year.