INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2014

5.INTANGIBLE ASSETS

Intangible assets consist of the following:

	December 31,
	2014			2013

Intellectual property	$	494,399		$	494,399
Accumulated amortization	(228,631		)	(219,358		)
	$	265,768		$	275,041

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 $2,728,701; $2,474,762; and $2,691,887 are included in Cost of sales for the years ended December 31, 2014, 2013, and 2012, respectively. Royalties payable under this agreement aggregated $787,434 and $602,209 at December 31, 2014 and 2013, respectively. Gross sales upon which royalties are based were $54,574,020; $49,495,232; and $53,837,732 for 2014, 2013, and 2012, respectively.

Amortization expense for the years ended December 31, 2014, 2013, and 2012, was $9,272; $11,479; and $71,532, respectively. Future amortization expense for the years 2015 through 2019 is estimated to be $9,272 per year.