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INTANGIBLE ASSETS
9 Months Ended
Mar. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 8 - INTANGIBLE ASSETS

 

Intangible assets consist of the following:

 

    March 31,     June 30,  
    2013     2012  
Land use rights, net   $ 11,827,575     $ 11,014,591  
Technology patent, net     794,344       1,902,131  
Customer relationships, net     7,528,397       8,253,368  
Non-compete agreement     94,684       125,453  
Trademarks     6,363,017       6,323,098  
Total   $ 26,608,017     $ 27,618,641  

 

LAND USE RIGHT

 

On September 25, 2009, Yuxing was granted a land use right for approximately 88 acres (353,000 square meters or 3.8 million square feet) by the People’s Government and Land & Resources Bureau of Hu County, Xi’an, Shaanxi Province. The fair value of the related intangible asset was determined to be the respective cost of RMB 73,184,895 (or $11,599,806). The intangible asset is being amortized over the grant period of 50 years using the straight line method.

 

On August 13, 2003, Tianjuyuan was granted a certificate of Land Use Right for a parcel of land of approximately 11 acres (42,726 square meters or 459,898 square feet) at Ping Gu District, Beijing. The purchase cost was recorded at RMB1, 045,950 (or $165,783). The intangible asset is being amortized over the grant period of 50 years.

 

On August 16, 2001, Jinong received a land use right as a contribution from a shareholder, which was granted by the People’s Government and Land & Resources Bureau of Yangling District, Shaanxi Province. The fair value of the related intangible asset at the time of the contribution was determined to be RMB 7,285,099 (or $1,154,688). The intangible asset is being amortized over the grant period of 50 years.

 

The Land Use Rights consist of the following:

 

    March 31,     June 30,  
    2013     2012  
Land use rights   $ 12,993,641     $ 12,912,125  
Less: accumulated amortization     (1,166,066 )     (1,897,534 )
Total land use rights, net   $ 11,827,575     $ 11,014,591  

 

TECHNOLOGY PATENT

 

On August 16, 2001, Jinong was issued a technology patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible asset was determined to be the respective cost of RMB 5,875,068 (or $931,198) and is being amortized over the patent period of 10 years using the straight line method.

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired technology patent was estimated to be RMB 9,200,000 (or $1,458,200) and is amortized over the remaining useful life of six years using the straight line method.

 

The technology know-how consisted of the following:

 

    March 31,     June 30,  
    2013     2012  
Technology know-how   $ 2,402,966     $ 2,387,891  
Less: accumulated amortization     (1,608,622 )     (485,760 )
Total technology know-how, net   $ 794,344     $ 1,902,131  

 

CUSTOMER RELATIONSHIP

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired customer relationships was estimated to be RMB 65,000,000 (or $10,302,500) and is amortized over the remaining useful life of 10 years.

 

    March 31,     June 30,  
    2013     2012  
Customer relationships   $ 10,361,000     $ 10,296,000  
Less: accumulated amortization     (2,832,603 )     (2,042,632 )
Total customer relationships, net   $ 7,528,397     $ 8,253,368  

 

NON-COMPETE AGREEMENT

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired non-compete agreement was estimated to be RMB1,320,000 (or $209,220) and is amortized over the remaining useful life of five years using the straight line method.

 

    March 31,     June 30,  
    2013     2012  
Non-compete agreement   $ 210,408     $ 209,088  
Less: accumulated amortization     (115,724 )     (83,635 )
Total non-compete agreement, net   $ 94,684     $ 125,453  

 

TRADEMARKS

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired trademarks was estimated to be RMB 40,700,000 (or $6,327,090), and is subject to an annual impairment test.

 

AMORTIZATION EXPENSE

 

Total amortization expenses of intangible assets for the three months ended March 31, 2013 and 2012 amounted to $393,942 and $507,250, respectively. Total amortization expenses of intangible assets for the nine months ended March 31, 2013 and 2012 amounted to $1,179,780 and $1,170,692, respectively.

 

Estimated amortization expenses of intangible assets for the next five (5) twelve-month periods ended March 31, are as follows:

 

March 31, 2014     1,582,468  
March 31, 2015     1,582,468  
March 31, 2016     1,550,906  
March 31, 2017     1,357,077  
March 31, 2018     1,295,973