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Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 5. GOODWILL AND INTANGIBLE ASSETS Identifiable intangible assets The changes in the carrying amount of intangible assets for the year ended December 31, 2017 and 2016 were as follows:
|  | 2017 |  |  | 2016 |
Balance at beginning of year |  | $ | 2,154,563 |  |  | $ | 2,470,127 |
Deduction: Impairment charge |  |  | (1,375,422 | ) |  |  | - |
Deduction: Amortization expense |  |  | (315,563 | ) |  |  | (315,564 | )
Balance at end of year |  | $ | 463,578 |  |  | $ | 2,154,563 |
The following table sets forth the components of intangible assets as of December 31, 2017 and 2016:
|  |  |  |  | As of December 31, 2017 |
|  | Estimated |  |  | Adjusted |  |  |  |  |  |  |
|  | Useful |  |  | Carrying |  |  | Accumulated |  |  |  |
|  | Life |  |  | Amount |  |  | Amortization |  |  | Net |
Trade name |  |  | 2 years |  |  | $ | 339,590 |  |  | $ | (324,060 | ) |  | $ | 15,530 |
Patents and copyrights |  |  | 12-17 years |  |  |  | 954,915 |  |  |  | (711,781 | ) |  |  | 243,134 |
Non-contractual customer relationships |  |  | 2-10 years |  |  |  | 2,522,228 |  |  |  | (2,226,741 | ) |  |  | 295,481 |
|  |  |  |  |  | $ | 3,816,733 |  |  | $ | (3,262,582 | ) |  | $ | 554,151 |
|  | As of December 31, 2016 |
|  | Adjusted |  |  |  |  |  |  |
|  | Carrying |  |  | Accumulated |  |  |  |
|  | Amount |  |  | Amortization |  |  | Net |
Trade name |  | $ | 339,590 |  |  | $ | (297,992 | ) |  | $ | 15,530 |
Patents and copyrights |  |  | 954,915 |  |  |  | (644,231 | ) |  |  | 243,134 |
Non-contractual customer relationships |  |  | 2,431,655 |  |  |  | (2,004,796 | ) |  |  | 204,914 |
|  | $ | 3,726,160 |  |  | $ | (2,947,019 | ) |  |  | 463,578 |
The following summarizes amortization of acquisition related intangible assets included in the statement of operations:
|  | Years Ended December 31, |
|  | 2017 |  |  | 2016 |
Cost of sales |  | $ | 236,651 |  |  | $ | 236,651 |
General and administrative |  |  | 78,912 |  |  |  | 78,913 |
|  | $ | 315,563 |  |  | $ | 315,564 |
The Company expects that amortization expense for the next five succeeding years will be as follows:
2018 |  | $ | 157,003 |
2019 |  |  | 132,336 |
2020 |  |  | 24,980 |
2021 |  |  | 24,980 |
2022 |  |  | 24,980 |
These amounts are subject to change based upon the review of recoverability and useful lives that are performed at least annually. Goodwill The excess of the purchase consideration over the fair value of the assets of acquired businesses is considered goodwill. Under authoritative guidance, purchased goodwill is not amortized, but rather it is periodically reviewed for impairment. The Company had goodwill of $8,101,661 at December 31, 2017 and 2016. This goodwill resulted from the acquisition of Mobilisa, Inc. and Positive Access Corporation. For the years ended December 31, 2017 and 2016, the Company performed its annual impairment test of goodwill in the fourth quarter. Under authoritative guidance, the Company can use industry and Company specific qualitative factors to determine whether it is more likely than not that impairment exists, before using a two-step quantitative analysis. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. The Company performed the first step of the goodwill impairment test to identify potential impairment by comparing fair value of the Company to its carrying amount, including goodwill. The fair value was determined using the weighting of certain valuation techniques, including both income and market approaches which include a discounted cash flow analysis, an estimation of an implied control premium, in addition to the Company’s market capitalization on the measurement date. The implied control premium selected was developed based on certain observable market data of comparable companies. The market capitalization is sensitive to the volatility of the Company’s stock price. Although the Company believes that the factors considered in the impairment analysis are reasonable, changes in any one of the assumptions used could have produced a different result which may have led to an impairment charge. Any future impairment loss could have a material adverse effect on our long-term assets and operating expenses in the period in which impairment is determined to exist. For the years ended December 31, 2017 and 2016, the Company determined that the fair value was more than its carrying amount and therefore the second step of the goodwill impairment test was not required. Accumulated impairment charges on goodwill through December 31, 2017 and 2016 are $30,085,862.

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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