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Goodwill and Other Intangible Assets
12 Months Ended
Dec. 31, 2012
Goodwill and Other Intangible Assets [Abstract]  
Goodwill and Other Intangible Assets

Note 5. 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.

At April 1, 2009, the purchase price has been 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       N/A  

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), our Transgenic Rat Program was in its nascent stage and our Assay Development Program was expected to achieve proof of concept by 2012. Neither program was expected to begin generating revenue until 2011-2012. In December 2011, in part because of management’s decision to focus on our therapeutic product development programs and not to allocate time and resources to the assays technology, we determined that we could not predict the future cash flows from the intangible IPR&D asset related to the Assay Development Program. Therefore, at December 31, 2011, we determined that the intangible asset was impaired and wrote off the entire approximately $655,000 carrying value of the asset.

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 represents changes in goodwill in 2012:

 

         

Balance as of December 31, 2011

  $ 1,895,000  

Foreign currency translation

    88,426  
   

 

 

 

Balance as of December 31, 2012

  $ 1,983,426  
   

 

 

 

The components of our other intangible assets at December 31, 2012 are summarized below:

 

                                                 

Other Intangible Asset Class

  Cost     Impairment     Accumulated
Amortization
    Foreign Currency
Translation
    Net Carrying
Amount
    Weighted-
Average
Amortization
Period
 

Customer relationships and developed technology

  $ 1,310,000     $ —       $ (694,202   $ 152,962     $ 768,760       8.0 years  

In-process research and development

    1,340,000       (654,961     (270,687     136,110       550,462       Indefinite  

Trade name

    310,000       —         (85,500     38,036       262,536       15.0 years  

Patents

    979,612       —         (738,466     —         241,146       17.0 years  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other intangible assets

  $ 3,939,612     $ (654,961   $ (1,788,855   $ 327,108     $ 1,822,904       12.3 years  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amortization expense was approximately $264,000 in 2012, $366,000 in 2011, and $427,000 in 2010.

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:

       

2013

  $ 268,585  

2014

  $ 268,374  

2015

  $ 268,069  

2016

  $ 262,479  

2017

  $ 239,728