INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

Note 3. INTANGIBLE ASSETS

 The Company’s intangible assets are related to the acquisition of assets from Durham Pharmaceuticals Ltd. in 2007.  As of March 31, 2013 and 2012, intangible assets related to this acquisition are summarized as follows:

				2013				2012
	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	5.5 years		1,305,000		—		1,305,000		1,305,000
Drug Master Files containing formulation, clinical and safety documentation used by the FDA	5.5 years		1,500,000		—		1,500,000		1,500,000
In-process pharmaceutical products for 2 indications	5.5 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 Cato Research contract related to this intangible asset was amortized over a three year period, which ended in 2010.

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

	Estimated Amortization Expense
2013	$	—
2014		875,000
2015		1,750,000
2016		1,750,000
2017		1,750,000