NETSOL Technologies, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Note 8 - Intangible Assets

Note 8 - Intangible Assets

12 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

NOTE 8 – INTANGIBLE ASSETS

Intangible assets consisted of the following:

	Product Licenses			Customer Lists			Technology			Total
Intangible assets - June 30, 2012 - cost	$	42,072,047		$	6,052,377		$	242,702		$	48,367,126
Additions		4,669,512			-			-			4,669,512
Effect of translation adjustment		(1,904,001	)		-			-			(1,904,001	)
Accumulated amortization		(15,727,599	)		(5,867,437	)		(84,947	)		(21,679,983	)
Net balance - June 30, 2013	$	29,109,959		$	184,940		$	157,755		$	29,452,654

Intangible assets - June 30, 2013 - cost	$	44,837,558		$	6,052,378		$	242,702		$	51,132,638
Additions		3,385,151			-			-			3,385,151
Deletion		(591,216	)								(591,216	)
Effect of translation adjustment		1,000,875			-			-			1,000,875
Accumulated amortization		(20,050,310	)		(5,940,633	)		(133,487	)		(26,124,430	)
Net balance - June 30, 2014	$	28,582,058		$	111,745		$	109,215		$	28,803,018

(A)	Product Licenses

Product licenses include internally-developed original license issues, renewals, enhancements, copyrights, trademarks, and trade names. Product licenses are amortized on a straight-line basis over their respective lives, and the unamortized amount of 28,582,058 will be amortized over the next 9.75 years. Amortization expense for the years ended June 30, 2014 and 2013 was $3,568,366 and $1,905,008, respectively.

The Company discontinued two software products during the fiscal year ended June 30, 2014 and fully amortized them as of June 30, 2014. The amount of amortization related to these two products was $1,348,631 and is recorded under cost of revenues as depreciation and amortization expense in the accompanying consolidated statements of operations.

(B)	Customer Lists

Customer lists are being amortized on a straight-line basis over five years, which approximates the anticipated rate of attrition. The unamortized balance of $111,745 will be amortized over the next 2.25 years. Amortization expense for the years ended June 30, 2014 and 2013 was $75,578 and $120,804, respectively.

(C)	Technology

Technology assets are being amortized on a straight-line basis over five years, which approximates the anticipated rate of attrition. The unamortized balance of $109,215 will be amortized over next 2.25 years. Amortization expense for the years ended June 30, 2014 and 2013 was $50,870 and $49,075, respectively.

(D)	Future Amortization

Estimated amortization expense of intangible assets over the next five years is as follows:

Year ended
June 30, 2015	$	3,713,947
June 30, 2016		3,289,184
June 30, 2017		3,215,520
June 30, 2018		3,190,976
June 30, 2019		3,190,976
Thereafter		12,202,415
	$	28,803,018