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INTANGIBLE ASSETS | 12 Months Ended
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Dec. 31, 2012
INTANGIBLE ASSETS |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS Intangible assets consist of the following:
|  | December 31, |
|  | 2012 |  | 2011 |
License agreement |  | $ | — |  | $ | 500,000 |
Trademarks and patents |  | 494,399 |  | 508,743 |
|  | 494,399 |  | 1,008,743 |
Accumulated amortization |  | (207,879 | ) | (678,614 | )
|  | $ | 286,520 |  | $ | 330,129 |
In 1995, the Company entered into a license agreement with the Chief Executive Officer of the Company for the exclusive right to manufacture, market, and distribute products utilizing automated retraction technology, which agreement has been amended twice. This technology is the subject of various patents and patent applications owned by such officer of the Company. The initial licensing fee of $500,000 was amortized over 17 years. The license agreement also provides for quarterly payments of a 5% royalty fee on gross sales. The royalty fee expense is recognized in the period in which it is earned. Royalty fees of $2,691,887; $2,643,209; and $2,940,948 are included in Cost of sales for the years ended December 31, 2012, 2011, and 2010, respectively. Royalties payable under this agreement aggregated $129,107 and $122,939 at December 31, 2012 and 2011, respectively. Gross sales upon which royalties are based were $53,837,732; $52,864,158; and $58,795,279 for 2012, 2011, and 2010, respectively. Royalties were also paid on litigation proceeds, net of legal fees, on a gross amount of $6.0 million in 2011. A small amount of royalties was paid on royalties from a licensing agreement with a third party. Amortization expense for the years ended December 31, 2012, 2011, and 2010, was $71,532; $43,934; and $43,440, respectively. Future amortization expense for the years 2013 through 2017 is estimated to be $14,559 per year.

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