Annual report pursuant to Section 13 and 15(d)

Intangible assets other than goodwill

v3.20.1
Intangible assets other than goodwill
 12 Months Ended
Dec. 31, 2019
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Intangible assets other than goodwill
Intangible Assets and Liabilities Other Than Goodwill
The Company capitalized $0 and $120,455 of product certification costs during the years ended December 31, 2019 and 2018, respectively. Also included in intangible assets are the costs incurred by the Company to acquire certain patents. These patents, once in service, are amortized on a straight-line basis over the estimated economic life of the associated product, which range from approximately 7-10 years. The Company capitalized $106,539 and $102,245 of patent-related costs during the years ended December 31, 2019 and 2018, respectively. The Company capitalized $4,144 and $3,212 in trademarks during the years ended December 31, 2019 and 2018, respectively.

Intangible assets and liabilities at December 31, 2019 and 2018 consist of the following:

 
 
December 31, 2019
 
December 31, 2018
Intangible assets
 
Cost
 
Accumulated Amortization
 
Net
 
Cost
 
Accumulated Amortization
 
Net
Product certifications
 
$
726,159

 
$
(399,906
)
 
$
326,253

 
$
726,159

 
$
(345,658
)
 
$
380,501

Patents
 
1,017,108

 
(206,499
)
 
810,609

 
910,569

 
(188,239
)
 
722,330

Developed technology
 
240,000

 
(108,000
)
 
132,000

 
240,000

 
(92,000
)
 
148,000

Trademarks
 
26,896

 
—

 
26,896

 
22,752

 
—

 
22,752

In process R&D
 
263,936

 
—

 
263,936

 
263,936

 
—

 
263,936

TTcogen intangible assets
 
29,607

 
(6,477
)
 
23,130

 
29,607

 
(2,776
)
 
26,831

Favorable contract assets
 
274,858

 
(263,901
)
 
10,957

 
1,561,739

 
(232,099
)
 
1,329,640

 
 
$
2,578,564

 
$
(984,783
)
 
$
1,593,781

 
$
3,754,762

 
$
(860,772
)
 
$
2,893,990

 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible liability
 
 
 
 
 
 
 
 
 
 
 
 
Unfavorable contract liability
 
$
4,689,025

 
$
(2,154,207
)
 
$
2,534,818

 
$
7,912,275

 
$
(1,619,676
)
 
$
6,292,599



The aggregate amortization expense related to intangible assets exclusive of contract related intangibles was $92,209 and $112,359 during the years ended December 31, 2019 and 2018, respectively. The net credit to cost of sales related to the amortization of the contract related intangible asset and liability for the years ended December 31, 2019 and 2018 was $502,729 and $860,858, respectively.
Contract Asset and Liability
The favorable contract asset and unfavorable contract liability in the foregoing table represent the fair value of ADGE's customer contracts (both positive for favorable contracts and negative for unfavorable contracts) which were acquired by the Company on May 18, 2017 (see Note 4. "Acquisition of American DG Energy Inc."), reduced by those sold during Q1 2019 (see Note 5."Sale of Energy Producing Assets and Goodwill Impairment").
Amortization of intangibles including contract related amounts is calculated using the straight line method over the remaining useful life or contract term and charged against cost of sales in the accompanying consolidated statement of operations. Aggregate future amortization over the next five years is estimated to be as follows:
 
 
Non-contract related intangibles
 
Contract related intangibles
 
Total
2020
 
$
246,967

 
$
(431,990
)
 
(185,023
)
2021
 
232,266

 
(437,477
)
 
(205,211
)
2022
 
225,556

 
(411,844
)
 
(186,288
)
2023
 
218,368

 
(335,183
)
 
(116,815
)
2024
 
195,961

 
(290,260
)
 
(94,299
)
Thereafter
 
436,810

 
(617,107
)
 
(180,297
)
 
 
$
1,555,928

 
$
(2,523,861
)
 
$
(967,933
)