Intangible Assets and Royalty Agreement

Intangible assets are summarized as follows (in thousands):



	Weighted Average Amortization Lives	September 30, 2016			December 31, 2015
		Cost			Cost
Licenses (a) (b) (c) (d)	7 years	$	1,699		$	1,009
Patents & Know How (b) (d)	19 years	17,211			8,001
Customer & Supplier Relationships (b) (d)	13 years	9,851			3,761
Tradenames & Trademarks (b) (d)	indefinite	1,838			1,008
Non-compete agreements (d)	4 years	1,080			—
In Process Research & Development (b)	n/a	25			25
Patents in Process (c)	n/a	2,298			1,823
Total		34,002			15,627
Less Accumulated amortization and impairment charges		(6,753		)	(4,864		)
Net		$	27,249		$	10,763

(a)

On January 29, 2007, the Company acquired a license from Shriners Hospitals for Children and University of South Florida Research Foundation, Inc. in the amount of $996,000. 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 revenue from the licensed products. The Company is also obligated to pay a $50,000 minimum annual royalty payment over the life of the license.

(b)

On January 5, 2011, the Company acquired Surgical Biologics, LLC. As a result, the Company recorded intangible assets for Customer & Supplier Relationships of $3,761,000, Patents & Know-How of $7,690,000, Licenses of $13,000, Tradenames & Trademarks of $1,008,000 and In-Process Research & Development of $25,000. For the nine months ended September 30, 2016, approximately $40,000 of costs associated with patents granted during the period were capitalized and included in Patents & Know-How subject to amortization.


(c)	Patents in Process consist of capitalized external legal and other registration costs in connection with internally developed tissue-based patents that are pending. Once issued, the costs associated with a given patent will be included in Patents & Know-How under intangible assets subject to amortization.


(d)	On January 13, 2016, the Company acquired Stability. As a result, the Company recorded intangible assets for Patents & Know - How of $9,170,000, Customer Relationships of $6,090,000, Non - compete agreements of $1,080,000, Tradenames & Trademarks of $830,000 and Licenses of $690,000.

Amortization expense for the nine months ended September 30, 2016 and 2015, was approximately $1,889,000 and $699,000, respectively, and $631,000 and $234,000 for three months ended September 30, 2016 and 2015, respectively.

Expected future amortization of intangible assets as of September 30, 2016, is as follows (in thousands):



Year ending December 31,	Estimated Amortization Expense
2016 (a)	$	630
2017	2,430
2018	2,075
2019	2,075
2020	1,805
Thereafter	16,396
	$	25,411

(a) Estimated amortization expense for the year ending December 31, 2016, includes only amortization to be recorded after September 30, 2016.