INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Note 4. INTANGIBLE ASSETS

The Company’s intangible assets are related to the acquisition of assets from Durham Pharmaceuticals Ltd. in 2007.  As of December 31, 2012 and 2011, intangible assets related to the ETI Acquisition are summarized as follows:

					2012						2011
	Estimated				Accumulated
	Life	Cost			Amortization			Net			Net
Contract related intangible asset:
Cato Research discounted contract	3 years		$	355,000		$	355,000		$	—		$	—
Technology related intangible assets:
Patents for the AzoneTS-based product candidates and formulation	6 years			1,305,000			—			1,305,000			1,305,000
Drug Master Files containing formulation, clinical and safety documentation used by the FDA	6 years			1,500,000			—			1,500,000			1,500,000
In-process pharmaceutical products for 2 indications	6 years			6,820,000			—			6,820,000			6,820,000
Total technology related intangible assets				9,625,000			—			9,625,000			9,625,000
Total, net			$	9,980,000		$	355,000		$	9,625,000		$	9,625,000

Intangible assets related to technology are expected to be amortized on a straight-line basis over the period ending 2019, when the underlying patents expire, and will commence upon revenue generation which the Company estimates may occur as early as the middle of 2014.  The contract related to this intangible asset was amortized over a three year period, which ended in 2010. Amortization expense relating to the contract was approximately $84,000 for the year ended December 31, 2010 and is included in research and development in the Consolidated Statement of Operations.

Estimated amortization expense for each of the next five years is as follows:

Year Ending December 31, 2012:	Estimated Amortization Expense
2013	$	—
2014		1,604,000
2015		1,604,000
2016		1,604,000
2017		1,604,000
2018		1,604,000