INTANGIBLES AND OTHER ASSETS

Long-lived intangible assets and other assets consisted of the following:



	Dollars in Thousands
	September 30, 2012						December 31, 2011
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Intangibles—acquired technology	$	9,100	$	1,594	$	7,506	$	6,535	$	911	$	5,624
Intangibles—assay royalties	1,434		359		1,075		1,434		205		1,229
Intangibles—third party payor relationships	367		—		367		367		—		367
Intangibles—tradenames and trademarks	842		86		756		344		49		295
Intangibles—customer relationships	695		—		695		—		—		—
Intangibles—covenants not to compete	277		—		277		—		—		—
Patents	915		266		649		703		267		436
Intellectual property	170		10		160		20		5		15
	$	13,800	$	2,315	$	11,485	$	9,403	$	1,437	$	7,966




	Estimated Useful Life
Intellectual property	10 years
Patents	life of patent
Intangibles—acquired technology	7 – 15 years
Intangibles—third party payor relationships	Indefinite
Intangibles—customer relationships	5 years
Intangibles—covenants not to compete	3 years
Intangibles—tradenames and trademarks	7 years

Other assets include U.S. security deposits and deferred tax assets, net of applicable valuation allowances.

Amortization expense for intangible assets was $0.3 million during each of the three months ended September 30, 2012 and 2011. Amortization expense for intangible assets was $0.9 million during the nine months ended September 30, 2012 and $1.0 million during the nine months ended September 30, 2011. Amortization expense for intangible assets is expected to be $1.7 million in each of the years 2013 through 2017.

On September 21, 2012, we acquired certain intangible assets from Axial Biotech, Inc. ("Axial") related to the ScoliScore^TM assay. In consideration for the purchase of the intangible assets, we made a cash payment of approximately $3.4 million to Axial and certain of its creditors. In addition, following the transfer of all of the assets related to the ScoliScore^TM assay and confirmation that the ScoliScore^TM assay operates, within our laboratories pursuant to protocol agreed upon by us and Axial, we will pay an additional $1.0 million to Axial and certain of its creditors, $0.1 million which will be placed into escrow for a period of one year from the closing of the transaction to secure Axial's indemnification obligations for, among other things, any breach of, or default under, any of Axial's representations, warranties, covenants or agreements contained in the asset purchase agreement. This acquisition provides us with the ScoliScore^TM assay technology and intellectual property, and an established revenue and customer base.

The following intangible assets were each valued separately using valuation approaches most appropriate for each specific asset.



Intangibles—acquired technology	Relief from Royalty Method
Intangibles—tradenames	Relief from Royalty Method
Intangibles—customer relationships	Multi-Period Excess Earnings Method
Intangibles—covenants not to compete	With and Without Method
Patents	Relief from Royalty Method

The Income Approach uses valuation techniques to convert future amounts, cash flows or earnings, to a single, discounted amount. The fair value measure is based on the value that is indicated by market expectations about the present value of those future amounts.

The Relief from Royalty Method assumes that if the Company did not have proprietary ownership of the genetic testing processes on which its revenues depend, it might elect to lease the rights or licenses from another company. The fair value is measured as the estimated discounted cash flows of the royalty payments avoided by ownership.

The Multi Period Excess Earnings Method measures the fair value as the estimated discounted cash flows of the existing customer relationships over a period during which revenues form existing customer relationships are assumed to have been substantially replaced by revenues from future customers.

The With and Without Method measures the fair value of the non-competition agreements as the probability adjusted difference between the estimated discounted cash flows with and without the effect of competition. The model that includes competition includes lost revenues as well as increased expenses required to rebuild the lost revenues.

The assets acquired were $4.2 million in identifiable intangible assets and $0.2 million in goodwill. No liabilities were assumed. The acquired assets are reported as a component of our laboratory services segment.

The goodwill arising from the acquisition has been assigned to our Laboratory Services segment and is expected to be deductible for tax purposes.

The amounts we have recorded for the allocation of our indefinite intangible assets and goodwill are preliminary and amounts may change when the acquisition accounting is completed.