Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets

v3.23.2
Intangible Assets
6 Months Ended
Jun. 30, 2023
Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS

NOTE 6 – INTANGIBLE ASSETS

 

The components of intangible assets, all of which are finite lived, were as follows:

 

    June 30, 2023     December 31, 2022        
    Gross
Carrying
Amount
    Accumulated
Amortization
    Net
Carrying
Amount
    Gross
Carrying
Amount
    Accumulated
Amortization
    Net
Carrying
Amount
    Useful
Life
 
                                           
Patents   $ 105,148     $ (36,173 )   $ 68,975     $ 82,431     $ (27,331 )   $ 55,100       10  
Patents in process     134,454      
-
      134,454       119,760      
-
      119,760       N/A  
Licenses     241,909       (77,761 )     164,148       241,909       (65,665 )     176,244       10  
Software     211,411       (148,418 )     62,993       161,284       (84,682 )     76,602       3  
Trademarks     3,230,000       (614,740 )     2,615,260       3,230,000       (453,242 )     2,776,758       10  
FAA waiver     5,930,000       (1,128,610 )     4,801,390       5,930,000       (832,113 )     5,097,887       10  
Developed technology     27,928,536       (4,158,590 )     23,769,946       23,270,614       (2,752,353 )     20,518,261       3 - 10  
Non-compete agreements     840,000       (840,000 )    
 
      840,000       (840,000 )    
-
      1  
Marketing-related assets     890,000       (38,040 )     851,960      
-
     
-
     
-
      10  
Customer relationships     1,090,000       (110,887 )     979,113       60,000       (16,839 )     43,161       5  
    $ 40,601,458     $ (7,153,219 )   $ 33,448,239     $ 33,935,998     $ (5,072,225 )   $ 28,863,773          

 

Amortization expense for the three months ended June 30, 2023 and 2022 was $1,059,955 and $966,910, respectively. Amortization expense for the six months ended June 30, 2023 and 2022 was $2,038,793 and $1,822,236, respectively. 

 

On March 20, 2022, the Company entered into a Purchase Agreement to acquire the assets of Ardenna, Inc., a leading provider of image processing and machine learning software solutions for rail infrastructure monitoring and inspections. The consideration for the acquisition was $900,000 in cash and 780,000 shares of the Company’s Common Stock (the “Ardenna Consideration Shares”). In connection of the acquisition, the parties entered into a Registration Rights and Lock-Up Agreement, which required the Company to file a resale registration statement covering the resale of the Ardenna Consideration Shares no later than ninety (90) days after the closing date and restricted the holder from transferring the Ardenna Consideration Shares for 180 days from the closing date, subject to certain exceptions. On April 5, 2022, the Company completed the acquisition. As a result of this transaction, the Company recognized developed technology in the amount of $6,843,600. The Company filed the registration statement Form S-3 on July 1, 2022, and it was declared effective on July 15, 2022.

 

On August 31, 2022, the Company entered into an asset purchase agreement with Field of View LLC, a North Dakota limited liability company. The total purchase consideration consisted of $250,000 of cash payable in monthly instalments over twelve months, and $75,520 of shares of the Company’s Common Stock, representing 16,000 shares (“FOV Consideration Shares”). The asset purchase agreement restricted the holder from transferring the FOV Consideration Shares for 180 days from the closing date, subject to certain exceptions. The Company acquired computer and research and development equipment amounting to $18,506 and intangibles for developed technology for $307,014. As of June 30, 2023, the equity was issued in full, and cash paid amounted to $104,166 for the six months ended June 30, 2023 and $104,167 for the twelve months ended December 31, 2022. The balance payable of $41,667 is accounted for as accrued purchase consideration included in accrued expenses and other current liabilities payable over the next five months.

 

On October 19, 2022, Airobotics entered into an Asset Purchase Agreement, as amended, to acquire all of the intellectual property, technical systems, and operations of Iron Drone Ltd. (“Iron Drone”), an Israeli-based company specializing in the development of autonomous counter-drone systems (the “Iron Drone Transaction”). The consideration for the Iron Drone Transaction was (i) $135,000 in cash, (ii) 46,129 shares of the Company’s Common Stock, (iii) warrants exercisable for 26,553 shares of the Company’s commons stock with an exercise price of $11.95, which shall be exercisable if, during the 48 month period following the closing, the average price per share of the Company’s Common Stock exceeds $52.38 for a period of at least 90 consecutive trading days, (iv) a right to acquire 35,377 shares of the Company’s Common Stock if during the 48 month period after the closing, the average price per share of the Company’s Common Stock exceeds $18.25 for a period of at least 90 consecutive trading days, and (v) a right to acquire 70,753 shares of the Company’s Common Stock if during the 48 month period after the closing, the average price per share of Company’s Common Stock exceeds $20.27 for a period of at least 90 consecutive trading days. On March 6, 2023, the Company completed the Iron Drone Transaction. The Company acquired intangibles for developed technology for $527,922. As of June 30, 2023, the cash was paid and equity was issued in full.

 

Estimated amortization expense for the next five years for the intangible assets currently being amortized is as follows:

  

Year Ending December 31,   Estimated
Amortization
 
2023 (6 months)   $ 2,108,678  
2024   $ 4,212,088  
2025   $ 4,154,205  
2026   $ 4,071,207  
2027   $ 4,064,043  
Thereafter   $ 14,838,018  
Total   $ 33,448,239