SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of New Accounting Pronouncements and Impact of Adoption on Financial Statements

The Company recorded the following cumulative effect as of January 1, 2018, itemized here (in millions):

	As reported December 31, 2017			Adjustments			Adjusted January 1, 2018
Accounts receivable	$	4.7		$	7.6	⁽¹⁾	$	12.3
Deferred revenue		(6.4	)		6.3	⁽²⁾		(0.1	)
Deferred royalty buy-down		(2.5	)		(0.4	)⁽³⁾		(2.9	)
Accounts payable and accrued expenses -third party royalties		(0.4	)		(0.5	)⁽³⁾		(0.9	)
Deferred tax assets, net		1.7			(1.3	)⁽⁴⁾		0.4
Income tax payable		-			(1.4	)⁽⁵⁾		(1.4	)

Retained earnings adjustment	$	(2.9	)	$	10.3		$	7.4

(1)	This adjustment represents the elimination of the one quarter lag by recognizing royalty revenues based on of XIALFLEX net sales and mark-up on cost of goods sold revenues reported to us by Endo for the fourth quarter of 2017.

(2)	Represents the remaining deferred revenue balance of the prepaid mark-up on cost of goods sold based on sales by non-affiliated sublicensees of Endo outside of the U.S.

(3)	Represents the amortization of the royalty buy-down and third party royalties expense associated royalty revenues based on XIALFLEX net sales reported to us by Endo for the fourth quarter of 2017.

(4)	To reverse a deferred tax asset associated with the deferred revenue balance of the prepaid mark-up on cost of goods sold by non-affiliated sublicensees of Endo outside of the U.S.

(5)	To create a tax liability associated the elimination of the one quarter lag by recognizing royalty revenues based on of XIALFLEX net sales and mark-up on cost of goods sold revenues reported to us by Endo for the fourth quarter of 2017.

In accordance with the new revenue standard requirements, the impact of adoption on our condensed consolidated balance sheet was as follows:

	March 31, 2018
	As Reported		Balances Without Adoption of New Revenue Standard		Effect of Change Higher / (Lower)
Assets
Accounts receivable	$	19,165,670	$	12,120,670	$	7,045,000
Deferred royalty buy-down		1,648,319		2,014,598		(366,279	)
Deferred tax assets		403,944		1,696,932		(1,292,988	)
Liabilities
Accounts payable and accrued expenses		1,781,163		1,271,163		510,000
Deferred revenue		117,635		1,023,854		(906,219	)
Income tax payable		2,535,676		1,288,977		1,246,699
Deferred revenue, long term		17,635		5,173,564		(5,155,930	)
Equity
Retained earnings		56,102,054		46,440,716		9,661,338

In accordance with the new revenue standard requirements, the impact of adoption on our condensed consolidated statement of operations was as follows:

	Three Months Ended March 31, 2018
	As Reported		Balances Without Adoption of New Revenue Standard		Effect of Change Higher / (Lower)
Revenues
Royalties	$	7,085,000	$	7,731,566	$	(646,566	)
Costs and expenses
General and administrative	$	2,069,633	$	2,087,921	$	(17,418	)
Provision for income taxes		1,078,574		1,220,244		(141,670	)
Net income		3,978,604		4,500,918		(522,314	)

Schedule of Maturities

The following table presents the Company’s schedule of maturities at March 31, 2018 and December 31, 2017:

	Maturities as of March 31, 2018				Maturities as of December 31, 2017
	1 Year or Less		Greater than 1 Year		1 Year or Less		Greater than 1 Year
Municipal bonds	$	3,425,134	$	100,000	$	1,002,650	$	100,000
Corporate bonds		41,828,133		500,230		48,143,495		3,155,573
Certificates of deposit		3,497,939		2,239,961		2,827,826		2,490,401
Total	$	48,751,206	$	2,840,191	$	51,973,971	$	5,745,974

Fair Value Assets Measured on Recurring Basis

As of March 31, 2018, the Company held certain investments that are required to be measured at fair value on a recurring basis. The following tables present the Company’s fair value hierarchy for these financial assets as of March 31, 2018 and December 31, 2017:

March 31, 2018	Type of Instrument	Fair Value		Level 1		Level 2		Level 3

Cash equivalents	Institutional Money Market	$	7,432,432	$	7,432,432	$	-	$	-

Cash equivalents	Certificates of Deposit		250,000		250,000		-		-

Cash equivalents	Corporate Bonds		2,585,000		2,585,000		-		-

Investments	Municipal Bonds		3,525,134		-		3,525,134		-

Investments	Corporate Bonds		42,328,363		-		42,328,363		-

Investments	Certificates of Deposit		5,737,900		5,737,900		-		-

December 31, 2017	Type of Instrument	Fair Value		Level 1		Level 2		Level 3

Cash equivalents	Institutional Money Market	$	3,108,549	$	3,108,549	$	-	$	-

Cash equivalents	Municipal Bonds		800,000		-		800,000		-

Investments	Municipal Bonds		1,102,650		-		1,102,650		-

Investments	Corporate Bonds		51,299,068		-		51,299,068		-

Investments	Certificates of Deposit		5,318,227		5,318,227		-		-

Summary of Stock Option Activity

A summary of our stock option activity during the three months ended March 31, 2018 is presented below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2017		232,000		$	21.56		2.52	$	5,050,990
Grants		30,000			41.82		-		-
Exercised		(10,000	)		13.24		-		-
Forfeitures or expirations		-			-		-		-
Outstanding at March 31, 2018		252,000		$	24.30		3.29	$	5,049,910
Exercisable at March 31, 2018		207,000		$	20.80		2.04	$	4,873,810

- Definition

Tabular disclosure of all investments in certain debt and equity securities for which the entity has the positive intent and ability to hold until maturity.

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