6. INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2013

INTANGIBLE ASSETS PATENTS:

INTANGIBLE ASSETS

Marketing Contacts

On September 17, 2009, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), whereby BioPharma became a wholly-owned subsidiary of the Company. Pursuant to the terms of the Merger Agreement, 4,500,000 shares of the Company’s common stock were issued in exchange for all the outstanding common stock of BioPharma.

Prior to the Merger Agreement, BioPharma had entered into a 50% joint venture with A&Z Pharmaceutical, LLC (“A&Z”), a privately held wholesale distibutor of pharmaceuticals, to form Pharma Technology International, LLC (“Pharma Tech”). Pharma Tech entered into a Distribution Agreement with WCI (the “Distribution Agreement”) to market, distribute and sell the WCI wound care products through existing A&Z distribution channels. The agreement covered 20 countries throughout the Middle East and Northern Africa and required Pharma Tech to sell a minimum of $500,000 of the products each year of the five year agreement to maintain the exclusive right to sell the WCI products.

According to ASC Topic No. 805-20-55-27, a customer relationship acquired in a business combination that does not arise from a contract may be an identifiable asset separate from goodwill. The Company determined the value of the marketing contacts using Level 3 inputs to our valuation methodology. Using an undiscounted cash flow analysis based on sales projections from the Distribution Agreement adjusted for the associated costs, the Company recorded an intangile asset in the amount of $4,187,815 or approximately $.93 per common share issued on the acquisition date. According to the guidance in ASC Topic No. 805-20-25-1, identifiable assets should be recognized separately from goodwill. As part of the BioPharma acquisition, the formula for a shingles-based product was obtained which is only at the idea stage and no determination has been made as to whether the formula can be developed cost effectively into a product, and as a result no value was assigned to this formula.

Based on the guidance in ASC Topic No. 805 the BioPharma transaction was accounted for as a business combination and the financial statements of BioPharma were consolidated with those of the Company.

In August of 2012, WCI terminated the Distribution Agreement due to Pharma Tech’s failure to sell a minimum of $500,000 of product. As a result, the Company impaired the remaining $27,044 balance of the intangible asset.

Patent

On September 29, 2009, the Company entered into an Asset Purchase Agreement (the “Agreement”), whereby the Company acquired a patent from Resorbable Orthopedic Products, LLC, a New Jersey limited liability company (“Resorbable NJ”) in exchange for 500,000 shares of Common Stock and the assumption of a legal fee payable in the amount of $47,595 which is related to the patent. Based on the guidance in ASC Topic No. 350-30, the patent was recorded as an intangible asset of $462,715, or approximately $.93 per share plus $47,595 for the assumed liability. The intangible asset is being amortized over an estimated ten year useful life. The amount amortized for the period ended June 30, 2013 was $25,515. The balance of the intangible asset, net of accumulated amortization, was $318,944 as of June 30, 2013.

Upon closing of the asset sale by Resorbable NJ, the managers of this New Jersey limited liability company abandoned the name “Resorbable Orthopedic Products, LLC.” RSI-ACQ Acquisition, LLC, a Texas limited liability company owned by the Company and formed on August 24, 2009, assumed the name of “Resorbable Orthopedic Products, LLC” in Texas.

The activity for the intangible accounts is summarized below:

	June 30, 2013			December 31, 2012
Patent	$	510,310		$	510,310
Accumulated amortization		(191,366	)		(165,851	)
Patent, net of accumulated amortization		318,944			344,459
Marketing contacts		0			4,187,815
Accumulated Amortization		0			(4,187,815	)
Marketing contacts, net of accumulated amortization		0			0
Total intangibles, net of accumulated amortization	$	318,944		$	344,459