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Note 7 - Resalable Software License Rights
 9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Research, Development, and Computer Software Disclosure [Text Block]
7
.
RESALABLE
SOFTWARE LICENSE RIGHTS
 
On
November 11, 2015,
the Company entered into a license agreement for the rights to all software and documentation regarding the technology currently known as or offered under the FingerQ name. The license agreement grants the Company the exclusive right to reproduce, create derivative works and distribute copies of the FingerQ software and documentation, create new FingerQ related products, and grant sub-licenses of the licensed technology to end users. The license rights have been granted to the Company in perpetuity, with a stated number of end-user resale sub-licenses allowed under the contract for a total of
$12,000,000.
The cost of sub-license rights expected to be amortized in the following
12
months is
$2,
370,000
and is classified as a current asset, and the balance as non-current. 
 
The Company has determined the software license rights to be a finite lived intangible asset, and estimated that the software license rights shall be economically used over a
10
year period, with a weighting towards the beginning years of that time-frame. The license rights were acquired during the
fourth
quarter of
2015,
but the usage of such rights in the Company
’s products was
not
generally available until
January 2017.
Accordingly, amortization began in the
first
quarter of
2017.
 
The remaining license rights are to be amortized over the greater of the following:
1
) an estimate of the economic use of such license rights,
2
) straight line method over
ten
years, or
3
) the actual usage of such rights. The Company believes categorizing the amortization expense under Cost of Sales more closely reflects the nature of the license right arrangement and the use of the technology. During the
three
month period ended
September 30, 2017
the Company sold licenses costing
$1,319
and amortized
$388,681.
During the
nine
month period ended
September 30, 2017
the Company sold licenses costing
$48,251
and amortized
$1,118,436.
The license rights had a carrying balance of
$10,831,404
as of
September 30, 2017.
 
On
December 31, 2015,
the Company purchased
third
-party software licenses in the amount of
$180,000
 in anticipation of a large pending deployment that has yet to materialize. The Company is amortizing over the same methodology described above with the greatest of the
three
approaches being the amortization for the periods. A total of
$2,640
and
$31,356
was expensed for actual sales during the
three
and
nine
months ended
September 30, 2017,
respectively. Since the license purchase, the actual per unit cost (actual usage) of such license rights in the cumulative amount of
$51,036
has been expensed, with a carrying balance of
$128,964
as of
September 30, 2017. 
The Company has classified the balance as non-current until a larger deployment occurs. Software license rights is comprised of the following as of:
 
  
   
September
30,
    
December 31,
  
   
2017
    
2016
  
                 
                 
Current software license rights
   $
2,370,000
     $
1,560,000
  
Non-current software license rights
    
8,590,368
      
10,598,411
  
Total software license rights
   $
10,960,368
     $
12,158,411
  
              
The future amortization under the economic use model for the next
five
years is as follows:
2018
-
2.6
million,
2019
-
3.0
million,
2020
-
2.4
million,
2021
-
1.2
million, and
2022
-
720,000.