Other Intangible Assets, Net

3 Months Ended

Sep. 30, 2014

8. OTHER INTANGIBLE ASSETS, NET

Other Intangible assets, net include customer relationships and certain prescription drug product formulas. The Company acquired these assets in its business combination with YantaiTianzheng. Customer relationships are amortized on a straight line basis over periods of 5 and 8 years. Pharmaceutical formulas including those retained as defensive assets are amortized on a straight t line basis over a period of 8 years.

Approximately, $10.37 million for the carrying amount of certain other product formulas that the Company will hold as defensive assets have been reclassified from indefinite life drug formulas. According to the Company’s years of industrial experience and R&D knowledge, to get a new drug formula approved from scratch usually take at least 8 years, so the Company is amortizing the pharmaceutical formulas as defensive assets over 8 years.

Other intangible assets at September 30, 2014 consist of the following:

	Customer Relationships	Yantai Tianzheng Drug Formulas	Defensive Drug Formulas	Total

Cost	$ 14,861,163	$ 10,384,096	$ 10,375,059	$ 35,620,318
Accumulated Amortization	(6,148,634)	(4,258,949)	(2,593,765)	(13,001,348)
Net carrying amount	$ 8,712,529	$ 6,125,147	$ 7,781,294	$ 22,618,970

Other intangible assets at June 30, 2014 consist of the following:


	Customer Relationships	Yantai Tianzheng Drug Formulas	Defensive Drug Formulas	Total

Cost	$ 14,856,818	$ 10,381,061	$ 10,372,025	$ 35,609,904
Accumulated Amortization	(5,674,003)	(3,928,913)	(2,268,880)	(11,871,796)
Net carrying amount	$ 9,182,815	$ 6,452,148	$ 8,103,145	$ 23,738,108

Amortization expense for customer relationships amounted to $472,565 and $472,151 for the three months ended September 30, 2014 and 2013, respectively.

Amortization expense for YTP drug formulas amounted to $328,605 and $326,377 for the three months ended September 30, 2014 and 2013, respectively.

Amortization expense for defensive drug formulas amounted to $323,942 and $323,658 for the three months ended September 30, 2014 and 2013, respectively. Amortization expenses are recorded in general and administrative expenses.

Amortization expense for fiscal years ending subsequent to September 30, 2014 is as follows:

		Amortization
1 year after September 30, 2014		$ 4,504,323
2 years after September 30, 2014		4,504,323
3 year3 after September 30, 2014		4,504,323
4 years after September 30, 2014		4,504,323
5 years after September 30, 2014		3,304,797
Thereafter		1,296,881
Total		$ 22,618,970

Bohai Pharmaceuticals Group, Inc. 10-Q