INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment and Intangible Assets [Text Block]

NOTE 6.   INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets consisted of the following:

December 31, 2017		Gross		Accumulated Amortization		Net	Estimated Life (in years)
MHPS Customer relationships	$	100,000	$	22,739	$	77,261	2
MHPS Tradename		55,000		12,507		42,493	2
Chiefton brand and graphic designs		69,400		69,400		–	2
Intangible assets, net	$	224,400	$	104,646	$	119,754

December 31, 2016		Gross		Accumulated Amortization		Net	Estimated Life (in years)
Chiefton brand and graphic designs	$	69,400	$	44,017	$	25,383	2

Amortization expense was $60,629 and $342,302 for the years ended December 31, 2017 and 2016.  Future amortization expense is $77,500 and $42,254, respectively, during the years ending December 31, 2018 and 2019.

Impairment of Intangible Assets and Goodwill

During the year ended December 31, 2016, we recorded an impairment charge for goodwill and the remaining unamortized value of the IPG intangible assets.  Colorado placed a limit on the number of licenses they would issue for cannabis cultivation facilities, which resulted in the aggregation of licenses by just a few companies.  Colorado did not, however, limit the level of production for these facilities.  As a result, since IPG was acquired, and the related intangible assets and goodwill were valued, there has been significant growth in the supply of cannabis in the Colorado market, which has led to significantly lower wholesale prices for cannabis towards the end of 2016 compared to earlier in the year and in 2015.  As a result of lower prices and aggregation of operations, cultivation companies are not using outside security services to the extent originally projected.  Due to these changes to the Colorado market, as of December 31, 2016, expected future cash flows for IPG’s operations in Colorado are estimated to remain at or near break even.  Accordingly, we have recorded an impairment charge of $1,344,242.