NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET

NOTE 4 – INTANGIBLE SOFTWARE TECHNOLOGY, NET

On April 29, 2011, we purchased software technology for $2 million in cash and issuance of 163,934 shares of our common stock, valued at $1 million on the date of purchase.  Acquisition costs of $89,000 were capitalized as part of the transaction.  The transaction was accounted for as an asset purchase.

We will pay and expense royalties (of 4% for five years to the seller and 2.5% for three years to the developer) for directly associated revenues relating to this acquired software technology.  No royalty expense has been recognized since the acquisition date.

A year end 2012 impairment analysis was performed due to indicators of impairment from changes in our use and plans for Azido technology and our market capitalization being below our net book value.  During the fourth quarter of 2012, changes in Azido projects and projected cash flows, which decreased or eliminated our expected future cash flows related to Azido technology’s use or disposition, resulted in an impairment charge of $2.3 million and a carrying value of $35,000 at December 31, 2012.

The following is a summary of our intangible software technology:

	March 31, 2013	December 31, 2012
(in thousands)
Intangible software technology	$35	$3,089
Less impairment charge	-	2,318
Less accumulated amortization	1	736
Intangible software technology, net	$34	$35