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Note F - Resalable Software Licenses Rights | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Research, Development, and Computer Software Disclosure [Text Block] | NOTE F — RESALABLE SOFTWARE LICENSES 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 $2,640,000 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 our 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. A total of $1,556,687 and $1,909 was expensed during the 2017 and 2016 years, respectively. Since the license purchase, a cumulative amount of $1,558,596 has been expensed, with a carrying balance of $10,441,404 as of December 31, 2017. The 2017 amortization expense was based on the economic use model as this was the greater of the three methods. 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 the total cost over the same methodology described above with the greatest of the three approaches being the amortization for the periods. A total of $35,916 and $19,680 was expensed for actual sales during the 2017 and 2016 years, respectively. Since the license purchase, the actual per unit cost (actual usage) of such license rights in the cumulative amount of $47,596 has been expensed, with a carrying balance of $132,404 as of December 31, 2017. During 2017, the Company also purchased $8,000 of another third -party software licenses. The Company has classified these balances as non-current until a larger deployment occurs. Software license rights is comprised of the following as of:
|  | 2017 |  |  | 2016 |
Current software license rights |  | $ | 2,640,000 |  |  | $ | 1,560,000 |
Non-current software license rights |  |  | 7,933,808 |  |  |  | 10,598,411 |
Total software license rights |  | $ | 10,573,808 |  |  | $ | 12,158,411 |
During the year ended December 31, 201 7, there were no events or changes in circumstances that indicated the carrying amount of the software license rights may not be recoverable from their undiscounted cash flows. Consequently, we did not perform an impairment test. The Company did not record an impairment loss related to the software license rights during the years ended December 31, 2017 and 2016. Estimated amortization expense based on economic use of the software license rights for each of the next five years and thereafter approximates the following:
Years ending December 31 |  |  |  |
2018 |  |  | 2,640,000 |
2019 |  |  | 3,000,000 |
2020 |  |  | 2,400,000 |
2021 |  |  | 1,200,000 |
2022 |  |  | 720,000 |
Thereafter |  |  | 613,808 |

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- Definition The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 985 -SubTopic 730 -URI http://asc.fasb.org/subtopic&trid=2197926 + Details
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