Sonnet BioTherapeutics, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS, NET

INTANGIBLE ASSETS, NET

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

5.	INTANGIBLE ASSETS, NET

GOODWILL

Goodwill is summarized by location as follows:

	September 30,		December 31,
	2014		2013

South Africa	$	396,487	$	396,487
ARB		2,806,990		2,550,611
WEW (Nottingham)		2,955,507		3,124,507
JF		425,151		425,151
Australia		9,002,738		-
Hooters Pacific NW		1,951,909		-
Spoon		653,185		-
	$	18,191,967	$	6,496,756

Goodwill resulted from the excess paid over the fair value of the net assets acquired for the three operating restaurants in South Africa effective October 1, 2011, our ARB, Just Fresh and WEW acquisitions as of September 30, 2013, November 6, 2013 and December 10, 2013 respectively, our acquisitions of Hooters Pacific NW and Spoon as of January 31, 2014, Hooters Australia as of July 1, 2014 and our acquisition of The Burger Company as of September 9, 2014 (included in ARB amount above).

OTHER INTANGIBLE ASSETS

Franchise cost for the Company’s Hooters restaurants and trademark/trade name for the Company’s Just Fresh and ARB entities consists of the following at September 30, 2014 and December 31, 2013. The Company is amortizing these franchise costs from the opening of each restaurant for the 20-year term of the franchise agreement with HOA and the trademark/trade name over its estimated 10-year useful lives.

	September 30,		December 31,
	2014		2013

Franchise cost:
South Africa	$	448,888	$	448,888
Brazil *		135,000		135,000
Australia *		498,318		-
Hungary		106,506		106,506
Hooters Pacific NW		56,936		-
		1,245,648		690,394
Trade name/trademark:
Just Fresh		1,010,000		1,010,000
ARB		1,784,096		1,784,327
		2,794,096		2,794,327
Total intangible cost		4,039,744		3,484,721
Accumulated amortization		(288,091)		(60,089)
Intangible assets, net	$	3,751,653	$	3,424,632

Three months ended September 30, 2014 and 2013:

Amortization expense	$	82,818	$	5,372

Nine months ended September 30, 2014 and 2013:

Amortization expense	$	228,002	$	15,903

Future amortization for franchise costs and trade name/trademarks are as follows:

September 30,	Franchise fee		Trade name		Total
2015	$	61,590	$	279,427	$	341,017
2016		61,590		279,427		341,017
2017		61,590		279,427		341,017
2018		61,590		279,427		341,017
2019		61,590		279,427		341,017
Thereafter		858,860		1,187,708		2,046,568
Totals	$	1,166,810	$	2,584,843	$	3,751,653

* The Brazil franchise cost and the Australian franchise costs related to future restaurants are not being amortized until they are opened.