INTANGIBLE ASSETS, NETIn September 2023, the Company acquired patent rights valued at $5.0 million under a Patent License Agreement with UOP, an affiliate of Honeywell, a related party. These patent rights were recorded at fair value based on the value of the IP Warrants issued, as defined in Note 13, Common Stock Warrants, and are amortized over an average useful life of 19 years based on the remaining useful lives of the patents acquired. Amortization expense for the years ended December 31, 2025 and 2024 was $0.3 million.
During the fourth quarter of 2025, management concluded it was necessary to reevaluate the usefulness of the assets within the patent portfolio based on the current stage of the Company’s ongoing research and development activities to support the forthcoming Energy Base product offering and related technologies. The assessment resulted in an abandonment charge of $1.7 million, recognized in research and development expense in the consolidated statement of operations and comprehensive loss. When an asset has been abandoned, the estimated useful life of the asset is updated to reflect the cease use date, and the remaining carrying value of the asset is amortized ratably between the commitment date and the cease use date. The abandonment charge was determined based on specific review of the underlying patents.
Intangible assets, net consisted of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| Cost | | Accumulated Amortization | | Net Carrying Amount | | Cost | | Accumulated Amortization | | Net Carrying Amount |
| Patents | $ | 4,990 | | | $ | (2,308) | | | $ | 2,682 | | | $ | 4,990 | | | $ | (334) | | | $ | 4,656 | |
Estimated future amortization expense of intangible assets as of December 31, 2025 are as follows (in thousands):
| | | | | |
| Intangible Assets |
| 2026 | $ | 267 | |
| 2027 | 267 | |
| 2028 | 267 | |
| 2029 | 267 | |
| 2030 | 267 | |
| Thereafter | 1,347 | |
| Total future amortization | $ | 2,682 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.