Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets and Liabilities Other Than Goodwill

Intangible Assets and Liabilities Other Than Goodwill

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Liabilities Other Than Goodwill

As of September 30, 2022 and December 31, 2021 we had the following amounts related to intangible assets and liabilities other than goodwill:


	September 30, 2022						December 31, 2021
Intangible assets	Cost		Accumulated Amortization		Total		Cost		Accumulated Amortization		Total
Product certifications	$	777,465	$	(572,230)	$	205,235	$	765,850	$	(532,676)	$	233,174
Patents	888,911		(382,765)		506,146		871,021		(314,997)		556,024
Developed technology	240,000		(152,000)		88,000		240,000		(140,000)		100,000
Trademarks	26,896		—		26,896		26,896		—		26,896
In Process R&D	263,936		(56,558)		207,378		263,936		(28,279)		235,657
Favorable contract asset	384,465		(370,824)		13,641		384,465		(355,193)		29,272

	$	2,581,673	$	(1,534,377)	$	1,047,296	$	2,552,168	$	(1,371,145)	$	1,181,023

Intangible liability
Unfavorable contract liability	$	2,903,419	$	(1,930,898)	$	972,521	$	3,056,655	$	(1,797,149)	$	1,259,506

The aggregate amortization expense related to intangible assets and liabilities exclusive of contract related intangibles for the three and nine months ended September 30, 2022 and 2021 was $49,885 and $150,376, and $51,229 and $145,306, respectively. The net credit to cost of sales related to the amortization of the contract related intangible asset and liability for the three and nine months ended September 30, 2022 and 2021 was $69,370 and $202,753, and $79,570 and $238,192, respectively. During the nine months ended September 30, 2021 we abandoned certain patent applications amounting to $7,400 and recorded an impairment charge in general and administrative expenses in the period.

Favorable/Unfavorable Contract Assets and Liabilities

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.

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 September 30, 2022 is estimated to be as follows:


	Non-contract Related Intangibles		Contract Related Intangibles		Total
Year 1	$	201,568	$	(265,854)	$	(64,286)
Year 2	187,551		(217,757)		(30,206)
Year 3	178,984		(120,464)		58,520
Year 4	174,968		(90,035)		84,933
Year 5	172,545		(78,261)		94,284
Thereafter	104,784		(200,150)		(95,366)
Total	$	1,020,400	(972,521)		$	47,879

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