GOODWILL AND INTANGIBLE ASSETS AND IMPAIRMENT

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

6. GOODWILL AND INTANGIBLE ASSETS AND IMPAIRMENT

Goodwill

The changes in the carrying amount of goodwill for the year ended December 31, 2011 and 2010 were as follows:

	2011		2010
Balance at beginning of period	$	12,308,661	$	12,258,661
Positive Access acquisition adjustments		-		50,000
Balance at end of period	$	12,308,661	$	12,308,661

Identifiable intangible assets

The changes in the carrying amount of intangible assets for the year ended December 31, 2011 and 2010 were as follows:

	2011			2010
Balance at beginning of period	$	6,494,134		$	7,445,234
Amortization expense		(942,985	)		(951,100	)
Balance at end of period	$	5,551,149		$	6,494,134

The Company has recorded the fair value of the acquired identifiable intangible assets, which are subject to amortization, using the income approach. The following table sets forth the components of these intangible assets as of December 31, 2011 and 2010:

	As of December 31, 2011
	Estimated		Adjusted					Net
	Useful		Carrying		Accumulated			as of
Amortized Intangible Assets	Life		Amount		Amortization			12/31/2011
Trade name		20 years	$	704,458	$	(186,390	)	$	518,068
Patents and copyrights		17 years		1,117,842		(339,298	)		778,544
Non-compete agreements		5 years		310,000		(144,667	)		165,333
Developed technology		7 years		3,941,310		(2,225,605	)		1,715,705
Backlog		3 years		303,400		(303,400	)		-
Non-contractual customer relationships		15 years		3,268,568		(895,069	)		2,373,499
			$	9,645,578	$	(4,094,429	)	$	5,551,149

	As of December 31, 2010
	Adjusted					Net
	Carrying		Accumulated			as of
Amortized Intangible Assets	Amount		Amortization			12/31/2010
Trade name	$	704,458	$	(137,486	)	$	566,972
Patents and copyrights		1,117,842		(277,259	)		840,583
Non-compete agreements		310,000		(82,667	)		227,333
Developed technology		3,941,310		(1,677,507	)		2,263,803
Backlog		303,400		(303,400	)		-
Non-contractual customer relationships		3,268,568		(673,125	)		2,595,443
	$	9,645,578	$	(3,151,444	)	$	6,494,134

The following summarizes amortization of acquisition related intangible assets included in the statement of operations:

	Years Ended December 31,
	2011		2010		2009
Cost of sales	$	784,749	$	791,416	$	718,945
General and administrative		158,236		159,684		106,572
	$	942,985	$	951,100	$	825,517

The Company expects that amortization expense for the next five succeeding years will be as follows:

2012	$	919,571
2013		907,223
2014		416,656
2015		310,458
2016		310,458

These amounts are subject to change based upon the review of recoverability and useful lives that are performed at least annually.

Goodwill and Intangible Asset Impairment

At December 31, 2011, the Company has goodwill of $12,308,661, which represents the aggregate of the excess purchase price for the acquired businesses of Mobilisa and Positive Access over the fair value of the net assets acquired.

The Company performs a goodwill impairment test annually in the fourth quarter or more frequently if events or circumstances indicate that an impairment loss may have been incurred. Under new guidance the Company adopted for its 2011 test, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Based on this review, as of December 31, 2011, the Company determined that there was no goodwill impairment.

The Company considered whether long-lived assets were also impaired. As of December 31, 2011, 2010 and 2009, the Company determined that there was no impairment of intangible assets.