DISCONTINUED OPERATIONS AND REAL ESTATE HELD FOR SALE

9 Months Ended

Mar. 31, 2015

Notes to Financial Statements

DISCONTINUED OPERATIONS AND REAL ESTATE HELD FOR SALE

NOTE 7. DISCONTINUED OPERATIONS AND REAL ESTATE HELD FOR SALE

In February 2012, we completed the sale of our fractional horsepower motor product line, operating under the name Pro-Dex Astromec (“Astromec”), located in Carson City, Nevada, pursuant to an Asset Purchase Agreement (the “APA”).

Under the terms of the APA, we received earnout payments based on revenues generated from the sale of certain products as defined in the APA. Such earnout payments, if and when earned, were paid to us within 30 days following the end of each of our fiscal quarters during the three years subsequent to the February 2012 closing date, and amount to 6%, 4% and 2% of the eligible sales in the first, second and third such years, respectively. The earnout payments were recognized in the quarter in which we became entitled to receive them. We recognized income from earnout payments of $11,000 and $33,000 for the three months ended March 31, 2015 and 2014, respectively, and $53,000 and $103,000 for the nine months ended March 31, 2015 and 2014, respectively. We have recognized an aggregate of $404,000 in income from such earnout payments since the February 2012 closing date.

In addition, as a result of the sale of the Astromec product line, we listed for sale the land and building constituting the facility in Carson City, Nevada, which was presented as real estate held for sale in the June 30, 2013 consolidated balance sheet with an aggregate carrying amount of $733,000. On July 5, 2013, we completed the sale of the Carson City facility. The sales price of the property was $980,000, of which we received net proceeds of $900,000, after deductions for expenses related to the sale, primarily consisting of broker commissions and fees, aggregating approximately $80,000, resulting in a gain of $167,000.

Based on the foregoing, and in conformity with applicable accounting guidance, the Astromec product line qualifies as a discontinued operation. Accordingly, financial results of Astromec have been reported as discontinued operations in the accompanying consolidated statements of operations for all periods presented. Information regarding revenue and operating results of Astromec included in discontinued operations is as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Revenues	$	11	$	33
Income before provision for income tax benefit of $14,000 and expense of $55,000, respectively	$	2	$	28

	Nine Months Ended March 31,
	2015		2014
Revenues	$	53	$	103
Income before provision for income taxes of $0 and $91,000, respectively	$	37	$	258

We do not expect to receive any future revenue or incur any future expenses related to the sale of Astromec.