10. Intangible assets

In 2003, as part of the acquisition of a group of companies, the Company acquired 100% of the outstanding voting common shares of DesalCo, which had an agreement to provide management and engineering services to OC-BVI. The Company attributed $856,356 of the purchase price of the acquisition to the value of this management services agreement, which has no expiration term. Initially, the Company determined that this intangible asset had an indefinite life and therefore it was not amortized. However in 2010, as a result of the loss by OC-BVI of its Baughers Bay contract (see Note 8), the Company began amortizing this asset over the life of OC-BVI’s remaining seven-year water supply contract for its Bar Bay plant.

The carrying amount of the Belize Water Production and Supply Agreement is being amortized over the 23-year term of the agreement that expires in March 2026.

On February 11, 2016, the Company purchased a 51% ownership interest in Aerex Industries, Inc. The purchase transaction identified certain intangible assets with a fair value of $5,900,000 and useful life as follows: Non-Compete (5 years), Trade name (15 years), Certifications/programs (3 years), Customer backlog (1 year), and Customer relationships (4 years). See further discussion of this acquisition at Note 21.

	December 31,
	2017		2016
Cost

Intangible asset management service agreement	$	856,356	$	856,356
Belize water production and supply agreement		1,522,419		1,522,419
Aerex - Non-compete agreement		400,000		400,000
Aerex - Trade name		1,400,000		1,400,000
Aerex - Certifications/programs		2,000,000		2,000,000
Aerex - Customer backlog		100,000		100,000
Aerex - Customer relationships		2,000,000		2,000,000
		8,278,775		8,278,775
Accumulated amortization
Intangible asset management service agreement		(856,356)		(840,839)
Belize water production and supply agreement		(988,652)		(922,460)
Aerex - Non-compete agreement		(153,333)		(73,333)
Aerex - Trade name		(178,889)		(85,556)
Aerex - Certifications/programs		(1,277,778)		(611,111)
Aerex - Customer backlog		(100,000)		(91,667)
Aerex - Customer relationships		(958,333)		(458,333)
		(4,513,341)		(3,083,299)
Intangible assets, net	$	3,765,434	$	5,195,476

Amortization of intangible assets for each of the next five years and thereafter is expected to be as follows:

2018	$	1,406,192
2019		795,081
2020		281,192
2021		166,192
2022		159,525
Thereafter		957,252
	$	3,765,434

Amortization expense was $1,430,042, $1,476,335, and $156,089 for the years ended December 31, 2017, 2016 and 2015, respectively.