Dharma Enterprises - Page 25

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               Trademarks and trade names    52,396   57,636    62,823                
               Customer list            106,433   86,098    69,117                    
               Right to financing            -0-       -0-       -0-                  
               Covenant noncompete           -0-       -0-       -0-                  
                                                                                     
                    Total               184,229  169,776   1158,643                   
               1 The expert report contained a mathematical error of $1               
          that we have corrected.                                                     
          AVG used three methods of valuation to determine reasonable                 
          royalty payments pursuant to the license agreement:  (1) A                  
          replacement cost method, (2) a market comparison method, and (3)            
          an income method.  The method that AVG used depended on the                 
          particular asset being valued.                                              
               First, AVG used the replacement cost method to value                   
          petitioner's right to use and commercially market SMMT and the              
          computer software.  AVG valued SMMT based on the $1,500 cost of a           
          4-week class at the Nyingma Institute for petitioner's eight                
          Nyingma managers for a total cost of $10,050 in 1990.  AVG added            
          $10,400 for consultations provided by DM, mostly with Tulku,                
          regarding the application of SMMT.  It assumed a 1-hour                     
          consultation each week and a consulting fee of $200 per hour.               
          AVG discounted the value of SMMT licensed by petitioner as                  
          compared with the courses now offered by the Nyingma Institute              
          because SMMT was being developed and revised during the years in            
          issue.                                                                      
               Respondent argues that the license agreement, as amended,              
          did not give petitioner the right to offer SMMT instruction to              
          nonmanagerial employees.  The license agreement did not expressly           
          mention SMMT and conveyed the right to DM's expertise and                   


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Last modified: May 25, 2011