Note 8 - Intangible Assets

12 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 8 – INTANGIBLE ASSETS

Intangible assets consist of:

	June 30, 2014			June 30, 2013
Intangible assets not subject to amortization:
FHA "Full Eagle" status	$	938,790		$	938,790
Goodwill		1,809,429			1,809,429
State licenses		31,293			31,293
	$	2,779,512		$	2,779,512
Less: Impairments		-			-
Total	$	2,779,512		$	2,779,512
Intangible assets subject to amortization:
Customer list	$	117,349		$	495,023
Nationwide license		824,999			824,999
	$	942,348		$	1,320,022
Less: accumulated amortization – nationwide license		(483,862	)		(424,932	)
Less: accumulated amortization – customer lists		(115,408	)		(182,430	)
Total	$	343,078		$	712,660
Total Intangible Assets, net	$	3,122,590		$	3,492,172

It is the Company’s policy to assess the carrying value of its intangible assets for impairment on an annual basis, or more frequently, if warranted by circumstances. The Company completed an annual impairment test of goodwill as of June 30, 2014 and no impairment losses were incurred. As of that date, the fair value of equity exceeded the carrying value (including goodwill) by 300%, indicating no impairment of goodwill. This test involved the use of estimates related to the fair value of the goodwill, and requires a significant degree of judgment and the use of subjective assumptions. The fair value of the goodwill and other intangible assets was determined using a discounted cash flow method. This method required management to make estimates related to future revenue, expenses and income tax rates.

The valuation methodology assumes the Company will generate an operating profit beginning in the next fiscal year ending June 30, 2015. Although the Company has made significant improvements in the last two quarters in maximizing revenue per funded loan and in reducing fixed and variable expenses, the Company has never generated an annual operating profit. The model further assumes we will double our current production volume over the next twelve months to levels we experienced during the fiscal fourth quarter of 2013.

Any of the following events or changes in circumstances could reasonably be expected to negatively affect our key assumptions:

● Significant change in mortgage interest rates;

● Loss of the Company’s primary warehouse lender;

● Additional or new regulatory and compliance requirements that restrict our plan for growth; or

● The loss of key production personnel

● Any default on our obligation to preferred shareholders

The amount allocated for the purchase of Customer List as a result of its acquisitions of UCMC, Brookside, Founders, Fidelity, and IMP amounted to $495,023. The Company amortizes Customer Lists over a period of three to eight years. Amortization expense recorded for each of the years ended June 30, 2014 and 2013 was $86,325. During the year, the Company ended its relationship with certain offices and as such wrote off $224,328 of unamortized balances related to Customer Lists. These amounts are shown as a loss on retirement of assets in the accompanying financial statements. Amortization expense related to Customer Lists is expected to be immaterial in future periods.

On April 14, 2006, the Company entered into a five-year renewable license agreement with Nationwide By Owner, Inc. (“Nationwide”), a Texas based company engaged in the business of providing proprietary technology to generate leads. The license agreement permits exclusive use of the technology to be used to generate leads for the origination of mortgage applications for submission to PSMI. The initial cost of the license was $150,000 paid in cash, and issuance of 150,000 shares of the Company’s stock in favor of Nationwide and its principals, at a fair value for consideration received of $674,999 on the date of issue. The total consideration for the cost of the license amounted to $824,999. The Company is amortizing the cost of the license over fourteen years, which is the initial five-year period of the agreement, plus three automatic three year renewal terms. Amortization expense recorded for each of the years ended June 30, 2014 and 2013 was $58,929. Amortization expense to be recognized for each of the years ending June 30, 2015 through 2019 is $58,929 and for the year ending June 30, 2020 is $46,494.