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Intangible Assets

12 Months Ended

Dec. 31, 2018

Intangible Assets, Net (Excluding Goodwill) [Abstract]

The Company’s intangible assets are comprised of purchased intangibles consisting of customer relationships, channel relationships, telecommunications software, trade names and trademarks and non-compete agreements. Intangible assets acquired in connection with a business combination are valued at fair value and amortized on a straight-line basis over the expected useful life which may range from three (3) to ten (10) years or more depending on the intangible asset characteristics.

The Company’s intangible assets also include internally developed software used in the sales and delivery of its information technology service offerings. The Company capitalizes certain internal costs related to software development to deliver its information technology services including but not limited to its Intelligent Telecommunications Management System (ITMS™), Public Key Infrastructure (PKI) and Optimiser Telecom Data Intelligence (TDI™) applications. Significant development costs are capitalized from the point of demonstrated technological feasibility until the point in time that the product is available for general release to customers. Once the product is available for general release, capitalized costs are amortized based on units sold, or on a straight-line basis generally over the expected functional life which may range from two (2) to five (5) years.

The following tables summarize purchased and internally developed intangible assets subject to amortization as of the periods presented below:

DECEMBER 31, 2018

Weighted

Average

Gross Carrying

Accumulated

Net Book

Amortization

Amount

Amortization

Value

Period

Customer Relationships

1,980,000

(1,732,500

)

247,500

Channel Relationships

2,628,080

(817,625

)

1,810,455

Internally Developed Software

1,476,623

(630,927

)

845,696

Trade Name and Trademarks

290,472

(90,370

)

200,102

6,375,175

(3,271,422

)

3,103,753

	DECEMBER 31, 2017
								Weighted
								Average
	Gross Carrying		Accumulated			Net Book		Amortization
	Amount		Amortization			Value		Period

Customer Relationships	$	1,980,000	$	(1,485,000	)	$	495,000		8
Channel Relationships		2,628,080		(642,420	)		1,985,660		5
Internally Developed Software		3,181,794		(2,246,650	)		935,144		3
Cybersecurity Authority to Operate		444,662		(408,427	)		36,235		3
Trade Name and Trademarks		290,472		(71,005	)		219,467		5

	$	8,525,008	$	(4,853,502	)	$	3,671,506

Purchased Intangibles

For the years ended December 31, 2018 and 2017, the Company did not recognize any acquisition related intangible assets.

For the year ended December 31, 2018, the Company disposed of fully amortized purchased intangible assets with a historical cost and accumulated amortization of approximately $2,374,700. For the year ended December 31, 2017, there were no disposals or sales of purchased intangible assets.

Internally Developed

For the year ended December 31, 2018, the Company recorded capitalized software costs related to our capitalized internally developed software costs of approximately $224,900 related to costs associated with our next generation TDI™ application.

For the year ended December 31, 2017 the Company recorded capitalized software costs related to our capitalized internally developed software costs of approximately $385,000 related to costs associated with our next generation TDI™ application.

The total weighted average remaining life of purchased and internally developed intangible assets is approximately 5.5 years and 1.5 years, respectively, at December 31, 2018.

The following table summarizes the estimated future amortization by purchased intangible asset type for fiscal years ending December 31:

Intangible Asset Type	2019		2020		2021		2022		2023		Thereafter		Total

Customer Relationships	$	247,500	$	-	$	-	$	-	$	-	$	-	$	247,500
Channel Relationships		175,205		175,205		175,205		175,205		175,205		934,430		1,810,455
Internally Developed Software		149,002		321,961		272,197		102,535		-		-		845,696
Trade Name and Trademarks		19,365		19,365		19,365		19,365		19,365		103,278		200,102

	$	591,072	$	516,531	$	466,767	$	297,105	$	194,570	$	1,037,708	$	3,103,753

The aggregate amortization expense recorded was approximately $756,000 and $1,078,600 for the years ended December 31, 2018 and 2017, respectively.