Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets and Liabilities Other Than Goodwill

v3.23.2
Intangible Assets and Liabilities Other Than Goodwill
6 Months Ended
Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Liabilities Other Than Goodwill Intangible Assets and Liabilities Other Than Goodwill
    As of June 30, 2023 and December 31, 2022 we had the following amounts related to intangible assets and liabilities other than goodwill:
June 30, 2023 December 31, 2022
Intangible assets Cost Accumulated Amortization Total Cost Accumulated Amortization Total
Product certifications $ 777,465  $ (618,749) $ 158,716  $ 777,465  $ (584,863) $ 192,602 
Patents 888,910  (452,914) 435,996  888,910  (405,140) 483,770 
Developed technology 240,000  (164,000) 76,000  240,000  (156,000) 84,000 
Trademarks 26,896  —  26,896  26,896  —  26,896 
In Process R&D 263,936  (84,837) 179,099  263,936  (65,984) 197,952 
Favorable contract asset 384,465  (374,287) 10,178  384,465  (372,091) 12,374 
Customer contract 1,591,327  (56,833) 1,534,494  —  —  — 
$ 4,172,999  $ (1,751,620) $ 2,421,379  $ 2,581,672  $ (1,584,078) $ 997,594 
Intangible liability
Unfavorable contract liability $ 2,618,168  $ (1,913,807) $ 704,361  $ 2,618,168  $ (1,797,951) $ 820,217 
The aggregate amortization expense related to intangible assets and liabilities exclusive of unfavorable contract related intangibles for the three and six months ended June 30, 2023 and 2022 was $117,833 and $167,194 and $50,469 and $100,491, respectively. The net credit to cost of sales related to the amortization of the unfavorable contract related intangible asset and liability for the three and six months ended June 30, 2023 and 2022 was $54,575 and $115,508 and $62,857 and $133,383, respectively.

Favorable/Unfavorable Contract Assets and Liabilities and Customer Contract Assets

    The favorable contract asset and unfavorable contract liability in the foregoing table represent the estimated fair value of American DG Energy's customer contracts (both positive for favorable contracts and negative for unfavorable contracts) which were acquired by us in May 2017 and include the customer relationship contract acquired by us in April 2023 as part of the Aegis acquisition. The Aegis customer relationship contract is being amortized on a straight-line basis over a period of seven (7) years which is consistent with the projected revenue recognition.

    Amortization of intangibles including contract related amounts is calculated using the straight-line method over the remaining useful life or contract term. Aggregate future amortization over the next five years and thereafter as of June 30, 2023 is estimated to be as follows:
Non-contract Related Intangibles Contract Related Intangibles Total
Year 1 $ 183,504  $ 13,774  $ 197,278 
Year 2 179,922  95,572  275,494 
Year 3 176,029  143,370  319,399 
Year 4 172,418  165,490  337,908 
Year 5 100,048  174,871  274,919 
Thereafter 48,068  237,056  285,124 
Total $ 859,989  830,133  $ 1,690,122 

We recognized a gain on termination of unfavorable contract liability of $71,375 in the six months ended June 30, 2022 due to the closing of certain energy production sites.