INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2013

NOTE 9.

INTANGIBLE ASSETS

Intangible assets are comprised of patents acquired in October 2005. Intangible assets, net consisted of the following at December 31:

Intangible assets	2013			2012
Patent - Amlexanox (Aphthasol®)	$	2,090,000		$	2,090,000
Patent - Amlexanox (OraDisc™ A)		6,873,080			6,873,080
Patent - OraDisc™		73,000			73,000
Patent - Hydrogel nanoparticle aggregate		589,858			589,858
		9,625,938			9,625,938
Less: accumulated amortization		(5,955,101	)		(5,479,953	)
Intangible assets, net	$	3,670,837		$	4,145,985

We performed an evaluation of our intangible assets for purposes of determining possible impairment as of December 31, 2013. Based upon recent market conditions and comparable market transactions for similar intangible assets, we determined that an income approach using a discounted cash flow model was an appropriate valuation methodology to determine each intangible asset’s fair value. The income approach converts future amounts to a single present value amount (discounted cash flow model). Our discounted cash flow models are highly reliant on various assumptions, including estimates of future cash flow (including long-term growth rates), discount rate, and expectations about variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows, all of which we consider level 3 inputs for determination of fair value. We believe we have appropriately reflected our best estimate of the assumptions that market participants would use in determining the fair value of our intangible assets at the measurement date. Upon completion of the evaluation, the fair value of our intangible assets exceeded the recorded remaining book value.

Amortization expense for intangible assets was $475,148 and $476,450 for the years ended December 31, 2013 and 2012, respectively. The future aggregate amortization expense for intangible assets, remaining as of December 31, 2013, is as follows:

Calendar Years	Future Amortization Expense
2014	$	475,148
2015		475,148
2016		476,450
2017		475,148
2018		475,148
2019 & Beyond		1,293,795
Total	$	3,670,837