Annual report pursuant to Section 13 and 15(d)

6. INTANGIBLE ASSETS

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6. INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2018
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
6. INTANGIBLE ASSETS

Intangible assets at December 31, 2018 and 2017 consist of the following: 

 

    December 31, 2018   December 31, 2017
        Accumulated           Accumulated    
    Cost   Amortization   Net   Cost   Amortization   Net
Trademark and other intangible rights related to Nabi-HB   $ 4,100,046     $ 927,391     $ 3,172,655     $ 4,100,046     $ 341,670     $ 3,758,376  
Rights to intermediates     907,421       205,250       702,171       907,421       75,618       831,803  
Customer contract     1,076,557       946,971       129,586       1,076,557       817,386       259,171  
    $ 6,084,024     $ 2,079,612     $ 4,004,412     $ 6,084,024     $ 1,234,674     $ 4,849,350  

Under the previous contract manufacturing agreement between ADMA and BPC, intermediate by-products derived from the manufacture of RI-002 were property of Biotest. As a result of the Biotest Transaction, ADMA obtained the right to these intermediate products, which are being amortized over a period of 7 years. The intangible rights to Nabi-HB is also being amortized over a period of 7 years.

 

The customer contract pertains to a contract manufacturing agreement with a third party that the Company assumed upon the consummation of the Biotest Transaction. On December 22, 2017, Company and the customer entered into an amendment to this contract which reduced the number of batches the Company was committed to supply to the customer. In connection with this amendment, the customer agreed to pay the Company an aggregate compensation fee of $7.0 million, which was recognized as other revenue in the accompanying consolidated statement of operations for the year ended December 31, 2017. The remaining required production volume is 13 batches over 2018 and 2019, and the Company recorded additional amortization expense of approximately $0.6 million in connection with the reduced volume. The net unamortized balance of this asset as of December 31, 2018 and 2017 is being amortized through the end of the contract period.

 

Amortization expense related to the Company’s intangible assets for the years ended December 31, 2018 and 2017 was $0.8 million and $1.2 million, respectively. Estimated aggregate future aggregate amortization expense for the next five years is expected to be as follows: 

 

  2019     $ 844,938  
  2020       715,352  
  2021       715,352  
  2022       715,352  
  2023       715,352