Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets and Liabilities Other Than Goodwill

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

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.