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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Jun. 30, 2023

NOTE 6 – GOODWILL AND INTANGIBLE ASSETS

As at June 30, 2023 and September 30, 2022, goodwill was $92,834,832 and $92,834,832, respectively. The goodwill pertains to the Bollinger acquisition on September 7, 2022. Goodwill is not amortized and is tested for impairment annually, or more frequently if there are indicators of impairment. Every reporting period the Company assesses qualitative factors (such as macroeconomic conditions, industry and market considerations, financial performance of the Company, entity-specific events etc.) to determine whether it is necessary to perform the quantitative goodwill impairment test. Upon the quantitative goodwill impairment test, impairment may arise to the extent carrying amount of a reporting unit that includes goodwill (i.e. Bollinger production unit) exceeds its fair value.

The market capitalization of the Company on June 30, 2023 was significantly lower than stockholder's equity reported on the Company's consolidated balance sheets that include Bollinger reporting unit as one of components - which could be viewed as an indicator of impairment. However, the Company believes that the significant decline in the Company’s stock price does not represent real financial position of the Company on June 30, 2023 because it is mostly determined by expected dilution of the common shares from exercise of warrants (recognized as liabilities in the consolidated balance sheets). Moreover, the Company believes it may have been the target of a market manipulation scheme involving illegal naked short selling of its common stock and has retained an independent professional firm to investigate and expose any potential wrongdoing. Furthermore, the net working capital of the Company on June 30, 2023 was positive and amounted to approximately $224 million after excluding liabilities that are supposed to be settled by own common stock and is comprised mostly of cash available for use - significantly in excess of the market capitalization.

The quantitative goodwill impairment test shall be performed next quarter when the Company, as prescribed by ASC 350 and ASC 805, expects to finish valuation of fair value of identifiable assets and liabilities purchased in September 2022 as part of the Bollinger acquisition.

Intangible assets are stated at cost, net of accumulated amortization. Patents and other identifiable intellectual property purchased as part of the Bollinger acquisition in September 2022 have been initially recognized at fair value.

Intangible assets with indefinite useful lives are not amortized but instead tested for impairment. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method. The weighted average useful life of intangible assets is 9.14 years. The straight-line method of amortization represents management’s best estimate of the distribution of the economic value of the intangible assets.

For the nine months ended June 30, 2023, and 2022, the Company recorded intangible asset additions of $22,443,551 (acquisitions of ELMS assets, see Note 4) and $352,601, respectively.


	June 30, 2023						September 30, 2022
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
Finite-Lived Intangible Assets	Amount		Amortization		Amount		Amount		Amortization		Amount
Website design and development	$	2,660,391		(1,773,594)	$	886,797	$	2,660,391	$	(1,108,496)	$	1,551,895
Intellectual property		58,375,794		(71,182)		58,304,612		58,375,794		(438,581)		57,937,213
Patents		32,391,186		(2,857,539)		29,533,647		32,391,186		(204,109)		32,187,077
Engineer design - ELMS		22,112,791		(1,289,913)		20,822,878		—		—		—
Other		1,820,995		(208,168)		1,612,827		1,820,994		(16,175)		1,804,819
Trademark		796,773		-		796,773		466,014		—		466,014
Total Intangible Assets	$	118,157,930	$	(6,200,396)	$	111,957,534	$	95,714,379	$	(1,767,361)	$	93,947,018

Total future amortization expense for finite-lived intangible assets is as follows:


Years Ended June 30,	Future Amortization
2023 (three months)	$	1,424,909
2024		6,372,189
2025		5,707,092
2026		5,707,092
2027		5,707,092
Thereafter		27,937,775
Total Future Amortization Expense	$	52,856,149

The future amortization expense does not include the net carrying amount intellectual property of $58,304,612 and trademark of $796,773, as these are not amortized. For the three and nine months ended June 30, 2023, amortization expense for the intangible assets was $913,061 and $4,433,035 and $221,699 and $667,075, for the three and nine months ended June 30, 2022, respectively.