6. Intangible assets and royalty agreement

Intangible assets activity is summarized as follows:

		September 30, 2011							December 31, 2010
	Weighted
	Average	Gross					Net		Gross					Net
	Amortization	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Lives	Value		Amortization			Value		Value		Amortization			Value
Intangible assets subject to amortization:
License-Shriners Hsp for Children & USF Research	10 years	$	996,000	$	(463,133	)	$	532,867	$	996,000	$	(388,433	)	$	607,567
License - SaluMedica LLC Spine Repair	10 years		2,399,000		(1,239,569	)		1,159,431		2,399,000		(1,017,557	)		1,381,443
License - Polyvinyl Alcohol Cryogel	10 years		2,667,000		(930,854	)		1,736,146		2,667,000		(726,616	)		1,940,384
Customer Relationships	14 years		3,520,000		(188,571	)		3,331,429		-		-			-
Supplier Relationships	14 years		241,000		(12,911	)		228,089		-		-			-
Patents & Know-How	14 years		5,530,000		(296,250	)		5,233,750		-		-			-
Licenses/Permits	3 years		13,000		(3,250	)		9,750		-		-			-
			15,366,000		(3,134,538	)		12,231,462		6,062,000		(2,132,606	)		3,929,394
Intangible assets not subject to amortization:
Trade Names/Trademarks	indefinite		1,008,000		-			1,008,000		-		-			-
In-process Research & Development-Liquid	indefinite		2,160,000		-			2,160,000		-		-			-
In-process Research & Development-Other	indefinite		25,000		-			25,000		-		-			-
		$	18,559,000	$	(3,134,538	)	$	15,424,462	$	6,062,000	$	(2,132,606	)	$	3,929,394

(a)

On January 29, 2007, the Company acquired a license from Shriners Hospitals for Children and University of South Florida Research Foundation, Inc. The acquisition price of this license was a one-time fee of $100,000 and 1,120,000 shares of common stock valued at $896,000 (based upon the estimated fair value of the common stock on the transaction date). Within 30 days after the receipt by the Company of approval by the FDA allowing the sale of the first licensed product, the Company is required to pay an additional $200,000 to the licensor. Due to its contingent nature, this amount is not recorded as a liability. The Company will also be required to pay a royalty of 3% on all commercial sales revenues from the licensed products.

(b)

License from SaluMedica, LLC (SaluMedica) for the use of certain developed technologies related to spine repair. This license was acquired through the acquisition of SpineMedica Corp.

(c)

On March 31, 2008, the Company entered into a license agreement for the use of certain developed technologies related to surgical sheets made of polyvinyl alcohol cryogel. The acquisition price of the asset was 400,000 shares of common stock valued at $2,596,000 (based upon the closing price of the common stock on the transaction date). The agreement also provides for the issuance of an additional 600,000 shares upon the Company meeting certain milestones related to future sales. On December 31, 2009, the Company completed the sale of its first commercial product and met its first milestone under this agreement. As a result, the Company issued an additional 100,000 shares of common stock to the licensor valued at $71,000. At September 30, 2011 and 2010, there are no additional amounts accrued for this obligation due to its contingent nature.

(d)

On January 5, 2011, the Company acquired Surgical Biologics, LLC. As a result, the Company recorded intangible assets for customer and supplier relationships, patents and know-how, licenses/permits, trade names and trademarks and in-process research and development.

Estimated future amortization expense related to the September 30, 2011 net carrying amount of $12,231,462 for intangible assets subject to amortization is as follows:

	Estimated
	Amortization
Year ending December 31,	Expense
2011 (1)	$	333,977
2012		1,335,909
2013		1,335,909
2014		1,331,575
2015		1,225,337
Thereafter		6,668,754
	$	12,231,462

(1)

Estimated amortization expense for the year ending December 31, 2011 includes only amortization to be recorded after September 30, 2011.