Rocky Mountain Chocolate Factory, Inc. - 10-K filing on 2020-05-29

Note 7 - Goodwill and Intangible Assets

12 Months Ended

Feb. 29, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE

– GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at

February 28

29:

				2020				2019
	Amortization Period (in years)			Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Store design		10		$	295,779	$	215,653	$	220,778	$	214,152
Packaging licenses	3	-	5		120,830		120,830		120,830		120,830
Packaging design		10			430,973		430,973		430,973		430,973
Trademark/Non-competition agreements	5	-	20		715,339		297,072		715,339		223,628
Franchise rights		20			5,979,637		2,931,949		5,979,637		2,300,717
Total					7,542,558		3,996,477		7,467,557		3,290,300
Intangible assets not subject to amortization
Franchising segment-
Company stores goodwill				$	832,308			$	832,308
Franchising goodwill					97,318				97,318
Manufacturing segment-goodwill					97,318				97,318
Trademark					20,000				20,000
Total goodwill					1,046,944				1,046,944

Total Intangible Assets				$	8,589,502	$	3,996,477	$	8,514,501	$	3,290,300

Amortization expense related to intangible assets totaled

$706,177,

$844,320,

and

$446,050

during the fiscal years ended

February 28

29,

2020,

2019

and

2018,

respectively.

February

29,

2020,

annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following:

2021	$	594,229
2022		490,060
2023		411,607
2024		345,642
2025		290,689
Thereafter		1,338,854
Total	$	3,471,081

During FY

2020

the Company initiated a store design project. The initiative is expected to add approximately

$250,000

of intangible assets, of which,

$75,000

was recorded as of

February

29,

2020.

This amount will be subject to amortization upon conclusion of the project.