Acquisition of Surgical Biologics, LLC (Tables)

9 Months Ended

Sep. 30, 2012

Acquisition of Surgical Biologics, LLC [Abstract]

Fair Value Measurements Using Unobservable Inputs for the Contingent Liability

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Contingent Liability for
	Accrued Earn-out
	Acquisition Consideration
Beginning balance at January 1, 2012	$	7,410,503
Common stock issued on earn-out		(3,185,223	)
Total remeasurement adjustments:
(Gains) or losses included in earnings		1,320,000
Ending balance at September 30, 2012	$	5,545,280

Purchase Price Allocation

     The actual purchase price was based on cash paid, the fair value of our stock on the date of the Surgical Biologics acquisition, and direct costs associated with the combination. The actual purchase price was allocated as follows:

Value of 5,250,000 shares issued at $1.35 per share	$	7,087,500
Cash paid at closing		350,000
Cash retained for working capital		150,000
Assumed Debt		182,777
Convertible Secured Promissory Note		1,250,000
Fair value of earn-out		7,404,700
Total fair value of purchase price	$	16,424,977
Assets purchased:
Tangible assets:
Debt-free working capital	$	671,880
Other assets, net		385
Property, plant and equipment		72,866
		745,131
Intangible assets:
Customer relationships		3,520,000
Supplier relationships		241,000
Patents and know-how		5,530,000
Trade names and trademarks		1,008,000
In-process research and development – liquid		2,160,000
In-process research and development – other		25,000
Licenses and permits		13,000
		12,497,000
Goodwill		3,182,846
Total Assets Purchased	$	16,424,977

Working capital and other assets were composed of the following:

Working capital:
Cash	$	33,583
Prepaid Expenses		2,738
Accounts Receivable		181,087
License Receivable		340,000
Inventory		347,106
Accounts payable and accrued expenses		(196,101	)
Deferred rent and customer deposits		(36,533	)
Debt-free working capital		671,880
Current portion of debt		(62,590	)
Long-term debt		(21,187	)
Line of credit		(99,000	)
Net working capital	$	489,103
Deposits	$	16,582
Deferred rent (non-current)		(16,197	)
	$	385

Estimated useful lives of acquired intangible assets

The values assigned to intangible assets are subject to amortization.  The intangible assets were assigned the following lives for amortization purposes:

		Estimated useful
Intangible asset:		life (in years)
	Customer relationships	14
	Supplier relationships	14
	Patents and know-how	14
	Trade names and trademarks	indefinite
	In-process research and development – liquid	indefinite
	In-process research and development – other	indefinite
	Licenses and permits	3