7. Intangible Assets

Intangible asset balances consisted of the following:

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The total cost of intangible assets for both years ended December 31, 2024 and 2023, was $159,967 which is included in intangible assets, net in the consolidated balance sheets. Amortization expense for the years ended December 31, 2024 and 2023, was $12,953 and $12,996, respectively, which is included in depreciation and amortization under operating expenses in the consolidated statements of operations and comprehensive loss. Impairment expense for the years ended December 31, 2024 and 2023, was $27,299 and $4,916, respectively, which is included in impairment loss and loss on disposal of assets on the consolidated statements of operations and comprehensive loss. Accumulated amortization was $115,418 and $75,166 as of December 31, 2024 and 2023, respectively.

The Company performs a test for recoverability (“TFR”) for its long-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Due to the changes in cannabis market conditions, changes in the current capital market environment, and a decline in actual results compared to projected results at Jupiter during December of 2024, there was an indication that the carrying amount of the Jupiter asset group may not be recoverable. During 2024, the result of the TFR indicated that the sum of undiscounted cash flows of the Jupiter asset group was less than the carrying value. The Company recorded an impairment charge of $27,299 for the year ended December 31, 2024, based on the difference between the fair value of the asset group which was determined by using the discounted cash flow method of the income approach, with the significant inputs being the discount rate and useful life, less the carrying value of the asset group. This loss is included in impairment loss and loss on disposal of assets on the consolidated statements of operations and comprehensive loss. This loss was allocated to each of the intangible assets on a pro rata basis using the relative carrying amounts of the assets.

The Company tests its license rights, which have indefinite useful lives, for potential impairment on an annual basis. During 2023, the Company recorded an impairment loss of $4,179. This loss is included in impairment loss and loss on disposal of assets on the consolidated statements of operations and comprehensive loss. No additional impairment of license rights was recorded during the year ended December 31, 2024.

During 2023, prior to the CGSF/SFNY Divestiture, the Company recognized an impairment loss of $737 on the CGSF-related management agreement to bring the net carrying value to zero. This loss is included in impairment loss and loss on disposal of assets in the consolidated statements of operations and comprehensive loss. Subsequently, the CGSF/SFNY Divestiture resulted in derecognizing the remaining management agreement balance and related accumulated depreciation.

The following table outlines the estimated future annual amortization expense for intangible assets as of December 31, 2024:

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