INTELLECTUAL PROPERTY/ LICENSING RIGHTS
|12 Months Ended|
Dec. 31, 2018
|Notes to Financial Statements|
|Note 5 - INTELLECTUAL PROPERTY/ LICENSING RIGHTS||
On January 26, 2016, the Company entered into an asset purchase agreement to acquire intellectual and contractual rights for all of North America with the option for Central and South America for Naltrexone Implants formulas created by the Seller for 24 months upon receipt of the intellectual property for a fee of $55,648. The Company, within the first 12 months has the right to purchase perpetual rights for above territories for a one-time fee, financed over 5 years. The rights are amortized over the 24 month contract life. Amortization charged to operations amounted to $1,963 and $27,767 for the year ended December 31, 2018 and 2017, respectively.
On July 28, 2016, the Company and Therakine, Ltd., an Irish private company limited by shares (“Therakine”), entered into a Development, Commercialization and License Agreement (the “Agreement”). Therakine has know-how and patents related to sustained release drug delivery technology (the “Technology”). Pursuant to the Agreement, Therakine granted the Company an exclusive license to utilize the Technology in developing injectable naltrexone products to treat patients suffering addiction to opioids, methamphetamines, cocaine, or alcohol. The Company is permitted to sell on a worldwide basis the products that utilize the Technology. The Agreement expires when the Company’s last valid claim to Therakine’s patents expires. Upon expiration of the Agreement, the licenses granted will become irrevocable and fully paid up.
The Company agreed to pay, in return for the license to the Technology, up to $2,750,000 in milestone payments and royalties ranging from 5% to 12% of net sales of products that use the Technology with aggregate payments per year of not less than $250,000. The Company is also required to pay a percentage of any sublicense income it receives related to products that use the Technology. In the event Therakine enters into a license agreement with a third party for products unrelated to injectable naltrexone that use the Technology, Therakine will pay the Company a percentage of its income from these products. As of December 31, 2018 and 2017, the Company has paid an aggregate of $250,000 of which includes $75,000 that was previously held in escrow until certain drug levels were met.
In 2016, the Company assigned and Therakine agreed to assign the rights under the Therakine Agreement, to BioCorRx Pharmaceuticals, Inc., the Company majority owned subsidiary.
At December 31, 2018, the Company management performed an evaluation of its acquired intangible assets for purposes of determining the implied fair value of the assets at December 31, 2018. The tests indicated that the recorded remaining book value of its acquired license exceeded its fair value for the year ended December 31, 2018 and accordingly recorded on impairment loss of $250,000 and reduced the carrying value to $0.
Effective August 20, 2018, the Company purchased all the worldwide rights of Naltrexone Implants formula(s) with with exception of New Zealand and Australia from Trinity Compound Solutions, Inc for $10,000 and 20,000 shares of its common stock for an aggregate purchase price of $236,000.
Disclosure of accounting policy for revenue recognition for licensing fees, which is consideration paid to the entity (licensor) by another party for the right to use, but not own, certain of the entity's intangible assets. Licensing arrangements include, but are not limited to, rights to use a patent, copyright, technology, manufacturing process, or trademark.
Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef