Note 11 - Intangible Assets, Net

12 Months Ended

Dec. 31, 2014

Intangible Assets Disclosure [Text Block]

11.	Intangible assets, net

	As of December 31,
	2014			2013
	US$(’000)			US$(’000)
Intangible assets not subject to amortization:
Domain name		1,579			1,580
Intangible assets subject to amortization:
Contract backlog		202			203
Customer relationship		3,545			3,548
Non-compete agreements		1,402			1,403
Software technologies		335			335
SMEs operation management applications		5,277			-
Cloud-computing based software platforms		1,517			1,518
Other computer software		78			78
Intangible assets, cost		13,935			8,665
Less: accumulated amortization		(3,704	)		(2,650	)
Less: accumulated impairment losses		(993	)		-
Intangible assets, net		9,238			6,015

Amortization expenses in aggregate for the years ended December 31, 2014 and 2013 were approximately US$1,052,000 and US$1,056,000, respectively.

For further development of comprehensive value-added services to its clients, which are mostly SMEs, the Company made deposit for the purchasing of SMEs operation management applications from an unrelated counter party in mid 2013 (See Note 12). Through several rounds of software functional requirements discussion and trial testing, in December 2014, the Company entered into a formal purchase agreement of RMB32.29 million (approximately US$5 million) with the counter party for the purchasing of these software applications. As of December 31, 2014, the Company had completed the internal trail test and the related handover formalities of the software applications. The Company is currently arranging free-trail of these applications by a certain group of its clients and anticipates to formally launching the related services in the second half of 2015.

The Company disposed its trade name upon disposal of two of its former VIEs in 2013 with an approximatelyUS$0.32 million of loss recognized accordingly.

As discussed in Note 3 (r), the Company performed an impairment analysis on its intangible assets as of December 31, 2014 with the assistance of an independent valuation firm and determined impairment exist for customer relationship and non-compete agreements. The fair value of intangible assets was determined using Multi-period Excess Earning Method (the “MPEEM method”). As an application of income approach, the MPEEM method is a widely used valuation method. It determines the fair value of the target asset as the present value of the cash flows attributable to it. As the target asset will generally earn cash flows through interaction with other tangible and intangible assets, the contributions to cash flows of those other assets must be removed. Those assets are referred as contributory assets which are defined as all assets that are utilized in the realization of expected future cash flows for the target asset (See Note 3 (r) for significant unobservable internally-developed inputs used in the fair value measurement).

For the years ended December 31, 2014, the Company provided approximately US$510,000 and US$479,000 impairment losses, which were associated with customer relationship and non-compete agreements, respectively. For the year ended December 31, 2013, no impairment loss was recognized for intangible assets (See Note 26 for segment information of intangible assets impairment losses).

Based on the net carrying value of the finite-lived intangible assets recorded as of December 31, 2014, and assuming no further subsequent impairment of the underlying intangible assets, the estimated future amortization expenses is approximately US$1,297,000 per annual for the years ended December 31, 2015, approximately US$1,291,000 for the year ended December 31, 2016, approximately US$789,000 for the year ended December 31, 2017, approximately US$737,000 for the year ended December 31, 2018 and approximately US$679,000 for the year ended December 31, 2019.