NOTE 3 – INTANGIBLE ASSETS

On June 1, 2019, the Company entered into an agreement (“Software Purchase Agreement”) with Elman Systems Limited and FM Labs LLC d/b/a Fidelity Media FMX SSP (“Seller”) to purchase certain software, as well as the related source code, object code, documentation, software trade secrets for aggregate consideration of $100,000, of which, $70,000 was payable upon execution of the agreement and $30,000 was payable within three (3) months from the execution of the agreement. On August 20, 2019, Kubient transferred and assigned all of its rights and obligations in, to and under the Software Purchase Agreement to Fidelity. As of December 31, 2019, the Company had paid $100,000 to the Seller, the software had been transferred to the Company and had been placed into service.

The asset acquired was recognized based on the cost to acquire such asset. In connection with the Software Purchase Agreement, the Company agreed to enter into independent contractor agreements with specified individuals who previously worked with the Seller.

During the year ended December 31, 2020, the Company acquired third-party data with a cost of $1,300,336 as a means using the data to support the evolution and growth of the Company’s artificial intelligence platform. The Company began recognizing amortization expense during the year ended December 31, 2020 over the five-year useful life (which is the period in which is the estimated life of the enhancement), as the product enhancement was available for general release to the Company’s customers under its beta testing program as well as integration into the Company’s pre-existing platform.

Intangible assets consist of the following:

Amortization expense related to intangible assets was $313,107 and $16,667 for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the Company’s intangible assets had a remaining weighted average amortization period of 3.8 years.

The estimated future amortization expense is as follows: