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, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

7.	INTANGIBLE ASSETS, NET

GOODWILL

Goodwill for our acquisition of ARB arose from the excess paid over the fair value of the net assets acquired of $1,653,016 (see acquisition Note 3 for further details). Goodwill for our South African operations arose from the excess paid over the fair value of the net assets acquired for the three operating restaurants effective October 1, 2011 and amounts to $396,487. An evaluation of our South African goodwill was completed effective December 31, 2012 at which time the Company determined that no impairment was necessary.

FRANCHISE COST

Franchise cost for the Company’s Hooters restaurants consists of the following at September 30, 2013 and December 31, 2012. The Company is amortizing these costs from the opening of each restaurant for the 20 year term of the franchise agreement with HOA.

TRADE NAME/TRADEMARK

Trade name/trademark for our acquisition of ARB of $1,784,443 was recorded based on valuation of future cash flows (see acquisition Note 3 for further details). The Company will amortize these costs over an estimated 10-year useful life starting on October 1, 2013.

	2013		2012
Franchise cost:
South Africa	$	433,888	$	358,888
Brazil *		135,000		135,000
Hungary		104,684		104,684
		673,572		598,572
Accumulated amortization		(54,653)		(38,740)
Intangible assets, net	$	618,919	$	559,832

Three months ended September 30, 2013 and 2012:

Amortization expense	$	5,372	$	5,116

Nine months ended September 30, 2013 and 2012:

Amortization expense	$	15,903	$	13,377

Amortization for franchise costs are as follows:

September 30,	Amount
2013	$	23,179
2014		23,179
2015		23,179
2016		23,179
2017		23,179
Thereafter		293,024
Totals	$	408,919

* The Brazil franchise cost and $75,000 of the fifth South Africa franchise cost are not being amortized until the opening of the restaurants.