Note 6 - Intangible Assets

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE 6 – INTANGIBLE ASSETS

Lighting Patent

On September 12, 2016, the Company executed an agreement dated August 31, 2016, to acquire assets, including a patent related to LED Lighting, from Tesla Digital, Inc., a Canadian Corporation, and Stevan (Steve) Pokrajac (the “Sellers”).

The patent remained in the name of Tesla Digital, Inc. until full settlement of the terms of the agreement. In the interim, pursuant to an updated agreement executed on April 15, 2019 between the Company and the Sellers, CEN has reaffirmed the rights to use the patented technology. In addition, the Company agreed to employ Stevan Pokrajac, by an LED subsidiary that the Company plans to form, but which has not yet been formed, in connection with the development of the acquired technology with compensation equal to $200,000 per year, commencing with the start of operations.

In March 2018, the agreement was amended to reflect a fixed one million registered shares of CEN common stock. As of September 30, 2021 and December 31, 2020, the value of this liability was $354,900 and $1,380,000, respectively. This liability will be remeasured at each reporting date using the current fair value of CEN’s common shares.

Subsequently, on October 7, 2021, the agreement was amended and finalized to increase the number of CEN common shares to be transferred to five million. Upon closing of the agreement, the CEN common stock was transferred to the Sellers and the transfer of the patent and real property was completed. In addition, the Sellers assumed the mortgage and associated accrued interest on certain real property that was included in the original agreement, see Note 7.

The Company intends to explore using the patented LED Lighting Technology across manufacturing operations and licensing opportunities across multiple industries such as horticultural, automotive, industrial and commercial lighting. The assets acquired, other than the patent, included certain machinery and raw materials, which were old and non-functioning and accordingly, had no fair value.

Intangible assets consist of the following at:

	September 30, 2021		December 31, 2020
Lighting patent	$	6,797,000	$	6,797,000
Product technology		345,356		-
Customer relationships		219,772		-
Capitalized software development costs		53,215		-
Trade names		47,094		-
Total identifiable intangible assets		7,462,437		6,797,000
Less: Accumulated amortization		2,183,570		1,840,853
Net	$	5,278,867	$	4,956,147

As of September 30, 2021 and December 31, 2020, there is no impairment expense recognized based on the Company’s expectations that it will be able to monetize the intangible assets. The lighting patent is being amortized straight-line over 16 years. Remaining intangibles, with the exception of the capitalized software development costs, which have not yet been implemented, are being amortized straight-line over 3 to 15 years. Expected amortization expense for the lighting patent is $424,812 per year through 2031, with the remaining $283,215 to be amortized in 2032. Expected amortization expense for the product technology, customer relationships, and trade names acquired as part of the CCM acquisition on July 9, 2021 are expected to be approximately $96,400 per year through 2023, $88,600 in 2024, $80,700 in 2025 and 2026, with the remaining $121,100 to be amortized through 2028. See Note 3 regarding the initial measurement period for the intangibles acquired as part of the acquisition. of CCM.