INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 6. INTANGIBLE ASSETS

Shown below are the details of intangible assets at June 30, 2017 and December 31, 2016:

	IP Software		Portfolios and Client Lists		Client Acquisition Costs		PCI Certification		Trademarks		Domain Names		Covenant Not to Compete		Total
Balance at December 31, 2015	$	1,548,601	$	1,489,175	$	1,048,060	$	355,458	$	561,772	$	339,147	$	81,667	$	5,423,880
Additions		102,689		-		1,319,820						83				1,422,592
Amortization		(1,271,226)	$	(704,184)		(670,543)		(149,668)		(234,064)		(145,270)		(81,667)		(3,256,622)
Balance at December 31, 2016		380,064		784,991		1,697,337		205,790		327,708		193,960		-		3,589,850
Additions		45,591		-		403,585		-		-		-				449,176
Amortization		(60,739)		(158,434)		(221,195)		(37,417)		(58,516)		(36,317)		-		(572,618)
Balance at March 31, 2017	$	364,916	$	626,557	$	1,879,727	$	168,373	$	269,192	$	157,643	$	-	$	3,466,408
Additions		-		-		403,300		-		-		-				403,300
Disposals		(11,099)														(11,099)
Amortization		(49,042)		(117,501)		(251,485)		(37,417)		(59,004)		(35,931)		-		(550,380)
Balance at June 30, 2017	$	304,775	$	509,056	$	2,031,542	$	130,956	$	210,188	$	121,712	$	-	$	3,308,229

Depreciation and amortization expense for the period ended June 30, 2017 and June 30, 2016 was $1,230,381 and $1,732,653, respectively. During the six months ended June 30, 2017, we incurred $1,122,998 of amortization as described in table above. Additionally, we incurred $84,864 for the amortization of terminal inventory placed with merchant customers during the six months ended June 30, 2017. The remaining $17,518, not included in table above, was for fixed assets (See Note 5. Fixed Assets). During the six months ended June 30, 2016, we amortized $1,713,130 for intangible assets and $69,117 for the amortization of terminal inventory placed with merchant customers. Additionally, we recorded $19,523 in depreciation for fixed assets (See Note 5. Fixed Assets).

Depreciation and amortization expense for the three months ended June 30, 2017 and June 30, 2016 was $573,018 and $844,535, respectively. During the three months ended June 30, 2017, we incurred $550,380 of amortization as described in the table above. Additionally, we incurred $38,323 for the amortization of terminal inventory placed with merchant customers. The remaining $(15,685), not included in table above, was for fixed assets (See Note 5. Fixed Assets) due to an adjustment in from our Russian segments. During the three months ended June 30, 2016, we amortized $797,296 for intangible assets and $35,285 for the amortization of terminal inventory placed with merchant customers. Additionally, we recorded $11,954 in depreciation for fixed assets (See Note 5. Fixed Assets).

The following table presents the estimated aggregate future amortization expense of other intangible assets:

Year	Amortization Expense

2017 (6 months)	$	675,687
2018		1,111,820
2019		1,111,821
2020		408,901
2021		-
Total	$	3,308,229

Software

At times, capitalized software development costs that add value to or extend the useful of the related software it develops for internal use and licensing. Costs for routine software updates are expensed as incurred. Capitalized costs are amortized over 36 months on a straight-line basis. Impairment is reviewed quarterly to ensure only viable active costs are capitalized.

During the six months and twelve months ended June 30, 2017 and December 31, 2016, respectively, we capitalized $45,591 and $102,689 of software development costs as follows:

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point of sale software ($43,176 and $1,469)

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payment processing software ($0 and $89,101)

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mobile payments billing software ($2,415 and $12,119)

For the three months and six months ended June 30, 2017 and 2016, amortization was $49,042 and $109,781 and $350,175 and $703,479, respectively.

Merchant Portfolios

Merchant Portfolios consist of portfolios purchased by us that earn future streams of income. The remaining contract terms of these portfolios range from 15 to 36 months at the time of acquisition. The useful lives of merchant portfolios represent management’s best estimate over which we expect to recognize the economic benefits of these intangible assets. At June 30, 2017 and December 31, 2016, the net value of these portfolios was $509,056 and $784,991, respectively. For the three and six months ended June 30, 2017, amortization of merchant portfolios was $117,501 and $275,935, respectively. For the three and six months ended June 30, 2016, amortization of merchant portfolios was $176,046 and $352,092, respectively.

Trademarks and Domain Names

At June 30, 2017 and December 31, 2016, the net book value of trademarks was $210,188 and $327,708, respectively, and the net book value of the domain names were $121,712 and $193,960, respectively. For the three months and six months ended June 30, 2017, amortization for trademarks was $59,004 and $117,520, respectively and for the three and six months ended June 30, 2016, amortization was $41,667 and $83,334, respectively. For the six and three months ended June 30, 2017, amortization for domain names was $35,931 and $72,248, respectively. For the three and six months ended June 30, 2016, amortization for domain names was $24,999 and $49,998 respectively.

PCI Certification

At June 30, 2017 and December 31, 2016, the net book value of our PCI certification was $130,956 and $205,790, respectively. For the three and six months ended June 30, 2017 and 2016, amortization for this certification was $37,417 and $74,834, respectively.

Non-Compete Agreements

In connection with the Company’s acquisition of Unified Payments, LLC in 2013, two key executives signed covenants not to compete. These covenants had a three-year life and at June 30, 2017 and December 31, 2016, the net book value was zero.

- 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.

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