NETSOL Technologies, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Ntoe 8 - Intangible assets

Ntoe 8 - Intangible assets

3 Months Ended

Sep. 30, 2011

Intangible Assets Disclosure [Text Block]

NOTE 8 - INTANGIBLE ASSETS:

	Product Licenses			Customer Lists			Total
Intangible assets - June 30, 2010 - cost	$	29,960,803		$	5,804,057		$	35,764,860
Additions		8,159,168			-			8,159,168
Effect of translation adjustment		106,429			-			106,429
Accumulated amortization		(12,788,921	)		(5,639,341	)		(18,428,262	)
Net balance - June 30, 2011	$	25,437,479		$	164,715		$	25,602,194

Intangible assets - June 30, 2011 - cost	$	38,226,400		$	5,804,057		$	44,030,457
Additions		1,788,199			-			1,788,199
Effect of translation adjustment		(621,424	)		-			(621,424	)
Accumulated amortization		(13,028,447	)		(5,656,990	)		(18,685,436	)
Net balance - September 30, 2011	$	26,364,728		$	147,067		$	26,511,795


Weighted average amortization period		8.02			5.00			7.63

Amortization expense for:
Three months ended September 30, 2011	$	326,562		$	17,648		$	344,210
Three months ended September 30, 2010	$	402,353		$	125,465		$	527,818

(A) Product Licenses

Product licenses include original license issue, renewals, enhancements, copyrights, trademarks, and trade names. Product licenses included unamortized software development and enhancement costs of $20,239,681.

(B) Customer Lists

On October 31, 2008, the Company entered into an agreement to purchase the rights to the customer list of Ciena Solutions, LLC, a California limited liability company (“Ciena”). Under the terms of the agreement, the total consideration for these rights included an initial payment of $350,000 (plus interest of $2,963), and deferred consideration to be paid in cash and the Company’s common stock based on the operational results of Ciena, and certain other factors, over a four-year fiscal period. Each fiscal period is measured from July 1 to June 30 with fiscal period one being the period from July 1, 2008 to June 30, 2009. No other assets or liabilities were acquired by the Company as a result of this transaction.

As a result of operational losses of Ciena in the first three fiscal periods, 2009, 2010 and 2011 respectively, the annual deferred consideration installment payments were determined to be zero.

Amortization expense of intangible assets over the next five years is estimated to be as follows:

	FISCAL YEAR ENDING
Asset	9/30/12		9/30/13		9/30/14		9/30/15		9/30/16		Thereafter		TOTAL
Product Licences	$	1,498,017	$	1,367,778	$	1,237,911	$	848,608	$	848,608	$	20,563,806	$	26,364,728
Customer Lists		70,592		70,592		5,883		-		-		-		147,067
	$	1,568,609	$	1,438,370	$	1,243,794	$	848,608	$	848,608	$	20,563,806	$	26,511,795