SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

The schedule of maturities at December 31, 2018 and 2017 are as follows:

	Maturities as of December 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	$	1,295,350	$	-	$	1,002,650	$	100,000
Corporate Bonds		61,321,162		1,099,834		48,143,495		3,155,575
Certificates of deposit		5,090,631		-		2,827,826		249,019
Total	$	67,707,143	$	1,099,834	$	51,973,971	$	5,745,974

Net Patent Costs

These patent costs are creditable against future royalty revenues. For each period presented below net patent costs consisted of:

	December 31,
	2018			2017
Patents	$	1,046,216		$	925,016
Accumulated Amortization		(601,738	)		(527,023	)
Net Patent Costs	$	444,478		$	397,993

Estimated Aggregate Future Amortization Expense

The estimated aggregate amortization expense for each of the next five years is approximately as follows:

2019	$	75,200
2020		58,300
2021		41,500
2022		41,500
2023		41,500

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	)		(0.6	)⁽³⁾		(1.0	)
Deferred tax assets, net		1.7			(1.3	)⁽⁴⁾		0.4
Income tax payable		-			(1.4	)⁽⁵⁾		(1.4	)

Retained earnings adjustment	$	(2.9	)	$	10.2		$	7.3

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

At December 31, 2018, contract assets of $10.0 million for which there’s an unconditional right to receive payment were included in accounts receivable on the consolidated balance sheet.

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

	December 31, 2018
	As Reported		Balances Without Adoption of New Revenue Standard			Effect of Change Higher / (Lower)
Assets
Accounts receivable	$	16.5	$	6.8		$	9.7
Deferred royalty buy-down		0.2		0.2			-
Deferred tax assets		0.3		1.4			(1.1	)
Liabilities
Accounts payable and accrued expenses		1.8		1.0			0.8
Deferred revenue		-		1.0			(1.0	)
Income tax payable		0.7		(1.2	)		1.9
Deferred revenue, long term		-		4.3			(4.3	)
Equity
Retained earnings		72.2		61.0			11.2

In accordance with the new revenue standard requirements, the impact of adoption on our consolidated statement of operations for the three and twelve months ended December 31, 2018 was as follows (in millions):

	Three Months Ended December 31, 2018
	As Reported		Balances Without Adoption of New Revenue Standard		Effect of Change Higher / (Lower)
Revenues
Royalties	$	9.9	$	8.5	$	1.4
Costs and expenses
General and administrative	$	2.5	$	2.4	$	0.1
Provision for income taxes		1.5		1.0		0.5
Net income		6.2		5.2		1.0

	Twelve Months Ended December 31, 2018
	As Reported		Balances Without Adoption of New Revenue Standard		Effect of Change Higher / (Lower)
Revenues
Royalties	$	33.0	$	31.7	$	1.3
Costs and expenses
General and administrative	$	8.8	$	8.7	$	0.1
Provision for income taxes		4.7		4.5		0.2
Net income		20.1		19.1		1.0