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Goodwill and Other Intangible Assets
9 Months Ended
Sep. 30, 2011
Goodwill and Other Intangible Assets [Abstract] 
Goodwill and Other Intangible Assets

Note 4. Goodwill and Other Intangible Assets

On April 1, 2009, we acquired the operations of Stem Cell Sciences Plc (SCS) for an aggregate purchase price of approximately $5,135,000. The acquired operations includes proprietary cell technologies relating to embryonic stem cells, induced pluripotent stem (iPS) cells, and tissue-derived (adult) stem cells; expertise and infrastructure for providing cell-based assays for drug discovery; a cell culture products business; and an intellectual property portfolio with claims relevant to cell processing, reprogramming and manipulation, as well as to gene targeting and insertion.

The purchase price was allocated as follows:

 

                 
    Allocated  purchase
Price
    Estimated life of
intangible assets
in years
 

Net tangible assets

  $ 36,000          

Intangible assets:

               

Customer relationships and developed technology

    1,310,000       6 to 9  

In-process research and development

    1,340,000       13 to 19  

Trade name

    310,000       15  

Goodwill

    2,139,000       N/A  
   

 

 

         

Total

  $ 5,135,000          
   

 

 

         

In-process research and development assets relate to: 1) the acquisition of certain intellectual property rights not expected to expire until 2027 related to our program focused on developing genetically engineered rat models of human disease (our “Transgenic Rat Program”); and 2) the acquisition of certain technology related to the commercialization of our SC Proven cell culture products and the development and commercialization of cell-based assay platforms for use in drug discovery and development (our “Assay Development Program”).

At the time of valuation (April 2009), the technology related to our Transgenic Rat Program was in its nascent stage, and therefore we concluded that the remaining 19 years of legal life of the intellectual property was appropriate as the remaining useful life for this technology.

As for our Assay Development Program, at the time of valuation (April 2009), we expected to achieve proof of concept by 2012. Due to the foundational nature of our Assay Development Program patents and technologies, we expect the technologies to remain useful and relevant within the industry for at least 10 years following commercial launch of a product or service under our Assay Development Program. Because these technologies are not expected to begin generating revenue until 2011-2012, we estimated the remaining useful life for these technologies to be approximately 13 years from the valuation date.

Trade name relates to the “SC Proven” trademark of our cell culture products which we expect to market for 15 years from the date of acquisition, based on which, we estimated a remaining useful life of 15 years from the valuation date.

The following table presents changes in goodwill:

 

         

Balance as of December 31, 2010

  $ 1,877,315  

Foreign currency translation

    28,296  
   

 

 

 

Balance as of September 30, 2011

  $ 1,905,611  
   

 

 

 

The components of our other intangible assets at September 30, 2011 are summarized below:

 

         

Other Intangible Asset Class

  Net Carrying
Amount
 

Customer relationships and developed technology

  $ 966,119  

In-process research and development

    1,211,697  

Trade name

    280,253  

Patents

    310,893  
   

 

 

 

Total other intangible assets

  $ 2,768,962  
   

 

 

 

Amortization expense was approximately $92,000 in the third quarter of 2011.

The expected future annual amortization expense for each of the next five years based on current balances of our intangible assets is as follows:

 

         
For the year ending December 31:      

2012

  $ 357,040  

2013

  $ 357,040  

2014

  $ 357,040  

2015

  $ 357,040  

2016

  $ 357,040