Goodwill

6 Months Ended

Jun. 30, 2011

Note 8

- Goodwill

In accordance with FASB ASC Topic 350-20, “Intangibles — Goodwill and Other”, (“ASC 350-20”), the Company tests goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of the Company is less than its carrying value. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, changes in its results of operations and changes in its forecasts or market expectation relating to future results.

The Company’s goodwill arose in connection with its acquisitions in June 2002, December 2003 and December 2010. The Company operates in one segment and as one reporting unit since operations are supported by one central staff and the results of operations are evaluated as one business unit. In general the Company’s medical device products are similar in nature based on production, distribution, services provided and regulatory requirements. Therefore, the Company uses market capitalization as the best evidence of fair value (market capitalization is calculated using the quoted closing share price of the Company’s common stock at its annual impairment testing date of October 1, multiplied by the number of common shares outstanding) of the Company. The Company tests goodwill for impairment by comparing its market capitalization (fair value) to its carrying value. The fair value of the Company is compared to the carrying amount at the same date as the basis to determine if an impairment exists. The Company performed the step one fair value comparison as of October 1, 2010 and the Company’s market capitalization exceeded its carrying value. At June 30, 2011, management believes there were no triggering events that would cause us to perform a step one fair value test for goodwill.

The changes in the carrying amount of goodwill for the six months ended June 30, 2011, are as follows:

Six months ended June 30, 2011


Balance as of December 31, 2010	$	45,689
Purchase accounting adjustments		1,968

Balance as of June 30, 2011	$	47,657

Purchase accounting adjustments, considered to be measurement period adjustments, in the six months ended June 30, 2011 consisted primarily of $1.5 million decrease of the acquired patent asset, a decrease of $500,000 in the acquired technology asset, a decrease in the fair value estimate of the royalty obligation of $200,000 and a decrease of $100,000 related to contingent consideration and an increase of approximately $300,000 related to unrecorded liabilities. The measurement period adjustments had no effect on the operations, results and an immaterial effect on the December 31, 2010 balance sheet. Accordingly, the adjustments were recorded in the during the six months ended June 30, 2011.