Note E – Intangible Assets

As a result of the acquisition of Clarient in December 2015, see Note D, we recorded $84.0 million in intangible assets comprised of $81.0 million in customer relationships amortized over a fifteen year period and $3.0 million in trade name which we are amortizing over a two year period. Previously, we acquired Path Logic in July 2014 and recorded $1.93 million in customer relationships as an intangible asset. We were amortizing these customer relationships over a thirteen year period. In 2016, the Company determined that the Path Logic customer relationship asset was impaired and recorded an impairment loss in the amount of approximately $1.6 million.

On January 6, 2012, we entered into a Master License Agreement (the “License Agreement”) with Health Discovery Corporation, a Georgia corporation (“HDC”). We were granted an exclusive worldwide license to certain of HDC’s “Licensed Patents” and “Licensed Know-How” (as defined in the License Agreement).

The License Agreement allows us, among other things, to develop and sell, without limitation, any gene, gene-product or protein-based LDTs using HDC’s technology in the Field and provides for sublicensing rights and the assignment of the License Agreement, in whole or in part, in our sole discretion. The License Agreement further provides us with access to certain HDC personnel and consulting resources in the fields of mathematics and in genetic and molecular test development. The Licensed Know-How also includes, among other things, certain tests, algorithms and computer software which have already been developed by HDC.

We have not made any milestone payments to HDC as of December 31, 2015. In 2016, the Company determined that this asset was impaired and recorded an impairment loss in the amount of $1.9 million.

Intangible assets as of December 31, 2016 and 2015 consisted of the following (in thousands):

		December 31, 2016
	Amortization Period	Cost		Accumulated Amortization		Impairment		Net
Trade Name	24 months	$	3,000	$	1,508	$	-	$	1,492
Customer Relationships	156-180 months		82,930		5,796		1,562		75,572
Support Vector Machine (SVM) technology	108 months		500		269		231		-
Laboratory developed test (LDT) technology	164 months		1,482		524		958		-
Flow Cytometry and Cytogenetics technology	202 months		1,000		287		713		-
Total		$	88,912	$	8,384	$	3,464	$	77,064

		December 31, 2015
	Amortization Period	Cost		Accumulated Amortization		Net
Trade Name	24 months	$	3,000	$	8	$	2,992
Customer Relationships	156-180 months		82,930		247		82,683
Support Vector Machine (SVM) technology	108 months		500		213		287
Laboratory developed test (LDT) technology	164 months		1,482		416		1,066
Flow Cytometry and Cytogenetics technology	202 months		1,000		228		772
Total		$	88,912	$	1,112	$	87,800

The Company recorded amortization expense of intangible assets in the consolidated statements of operations as follows (in thousands):

	For the Years Ended December 31,
	2016		2015		2014
Amortization of intangible assets	$	7,272	$	412	$	295

The Company recorded amortization expense from customer relationships as a general and administrative expense. The amortization expense for the Support Vector Machine (SVM) technology, the Laboratory developed tests (LDT) technology and the Flow Cytometry and Cytogenetics technology intangibles has been recorded as research and development expense as we have not had products, services or cost savings directly attributable to these intangible assets that would require that it be recorded in cost of goods sold.

The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of December 31, 2016 is as follows (in thousands):

Years Ending December 31,	As of December 31,
2017	$	6,892
2018		5,400
2019		5,400
2020		5,400
2021		5,400
Thereafter		48,572
Total	$	77,064