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Intangibles

12 Months Ended

Dec. 31, 2021

10. Intangible Assets

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 fifteen (15) 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, 2021

Gross Carrying

Accumulated

Net Book

Amount

Amortization

Value

Customer Relationships

2,392,000

(61,650

)

2,330,350

Channel Relationships

2,628,080

(1,343,241

)

1,284,839

Internally Developed Software

3,082,705

(1,633,516

)

1,449,189

Trade Name and Trademarks

1,330,472

(165,964

)

1,164,508

9,433,257

(3,204,371

)

6,228,886

	DECEMBER 31, 2020

	Gross Carrying		Accumulated			Net Book
	Amount		Amortization			Value

Customer Relationships	$	1,980,000	$	(1,980,000	)	$	-
Channel Relationships		2,628,080		(1,168,036	)		1,460,044
Internally Developed Software		1,846,194		(1,280,108	)		566,086
Trade Name and Trademarks		290,472		(129,099	)		161,373

	$	6,744,746	$	(4,557,243	)	$	2,187,503

Purchased Intangibles

For the year ended December 31, 2021, the Company disposed of fully amortized purchased intangible assets with a historical cost and accumulated amortization of approximately $1,980,000. For the year ended December 31, 2020, there were no disposals or sales of purchased intangible assets.

Internally Developed

For the year ended December 31, 2021, the Company recorded capitalized software development costs of approximately $2.6 million related to costs associated with upgrading the ITMS™ platform, secure identity management technology and network operations center of which $209,400 was transferred from capital work in progress to internally developed software during the year. Capital work in progress is included in other long-term assets in the consolidated balance sheet.

For the year ended December 31, 2020 the Company recorded capitalized software development costs of approximately $903,000 related to costs associated with upgrading the ITMS™ platform, secure identity management technology and network operations center of which $1.2 million was transferred from capital work in progress to internally developed software during the year. Capital work in progress is included in other long-term assets in the consolidated balance sheet.

The aggregate amortization expense recorded was approximately $632,400 and $482,200 for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, estimated annual amortization for our intangible assets for each of the next five years is approximately:

2022	$	1,104,166
2023		1,045,400
2024		833,133
2025		511,170
2026		511,170
Thereafter		2,223,847
Total	$	6,228,886