Annual report pursuant to Section 13 and 15(d)

Intangible assets and liabilities other than goodwill

v3.20.4
Intangible assets and liabilities other than goodwill
 12 Months Ended
Dec. 31, 2020
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Intangible assets and liabilities other than goodwill Intangible Assets and Liabilities Other Than Goodwill
We did not capitalize any product certification costs during the years ended December 31, 2020 and 2019, respectively. Also included in intangible assets are the costs incurred by us 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. We capitalized $43,252 and $106,539 of patent-related costs during the years ended December 31, 2020 and 2019, respectively. We capitalized $0 and $4,144 in trademarks during the years ended December 31, 2020 and 2019, respectively. We capitalized $80,000 and $0 in favorable contract obligations in the years ended December 31, 2020 and 2019, respectively.
Intangible assets and liabilities at December 31, 2020 and 2019 consist of the following:

December 31, 2020 December 31, 2019
Intangible assets Cost Accumulated Amortization Net Cost Accumulated Amortization Net
Product certifications $ 726,159  $ (478,357) $ 247,802  $ 726,159  $ (399,906) $ 326,253 
Patents 855,014  (220,764) 634,250  1,017,108  (206,499) 810,609 
Developed technology 240,000  (124,000) 116,000  240,000  (108,000) 132,000 
Trademarks 26,896  —  26,896  26,896  —  26,896 
In process R&D 263,936  —  263,936  263,936  —  263,936 
Favorable contract assets 384,465  (313,031) 71,434  304,465  (270,378) 34,087 
$ 2,496,470  $ (1,136,152) $ 1,360,318  $ 2,578,564  $ (984,783) $ 1,593,781 
Intangible liability
Unfavorable contract liability $ 2,534,818  $ (917,767) $ 1,617,051  $ 4,689,025  $ (2,154,207) $ 2,534,818 

The aggregate amortization expense related to intangible assets exclusive of contract related intangibles was $113,723 and $92,209 during the years ended December 31, 2020 and 2019, 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, 2020 and 2019 was $400,404 and $502,729, respectively. We abandoned certain patent applications in the year ended December 31, 2020 and recorded a non-cash charge of $205,345 as long-lived asset impairment in the Consolidated Statement of Operations.
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 us 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".
During the year ended December 31, 2020, we determined that certain of the ADGE customer contracts terminated due to the customers failure to perform their obligations pursuant to the contractual agreements and accordingly reversed $478,411 of unfavorable contract liability related to these contacts. The adjustments are included in the Consolidated Statement of Operations for the year ended December 31, 2020, as non-cash benefits within long-lived asset 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
2021 $ 185,341  $ (317,275) $ (131,934)
2022 178,264  (320,008) (141,744)
2023 171,191  (253,372) (82,181)
2024 150,054  (208,448) (58,394)
2025 141,109  (130,116) 10,993 
Thereafter 455,459  (335,828) 119,631 
  $ 1,281,418  $ (1,565,047) $ (283,629)