INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2013

5.	INTANGIBLE ASSETS

Intangible assets consist of the following:

	December 31,
	2013			2012

Intellectual property	$	494,399		$	494,399
Accumulated amortization	(219,358		)	(207,879		)
	$	275,041		$	286,520

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 $2,474,762; $2,691,887; and $2,643,209 are included in Cost of sales for the years ended December 31, 2013, 2012, and 2011, respectively. Royalties payable under this agreement aggregated $602,209 and $129,107 at December 31, 2013 and 2012, respectively. Gross sales upon which royalties are based were $49,495,232; $53,837,732; and $52,864,158 for 2013, 2012, and 2011, respectively.

Amortization expense for the years ended December 31, 2013, 2012, and 2011, was $11,479; $71,532; and $43,934, respectively. Future amortization expense for the years 2014 through 2018 is estimated to be $11,479 per year.