Business Acquisitions

12 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Business Acquisitions

3. Business Acquisitions

During the fiscal year ended June 30, 2015, we completed two acquisitions. On December 1, 2014, we completed the acquisition of Huber Precision (“Huber”), a manufacturer of machined parts, primarily for the oil and electronics industry. The aggregate purchase price paid was $209,000. On February 1, 2015, we completed the acquisition of Fineline Molds (“Fineline”), a manufacturer of plastic injection molds for a variety of industries. The aggregate purchase price was $757,000, of which $657,000 was paid in cash at closing and $100,000 of which is to be paid by the Company under the terms of a four-year promissory note issued to Fineline at closing, which bears interest at 4% per annum and requires sixteen equal quarterly payments of principal and accrued interest in the amount on $6,794. The note is secured by all of the assets acquired by us from Fineline.

The following summarizes the consideration paid and the estimated fair values of the assets acquired for each acquisition as of the respective acquisition date (in thousands): 

	Huber Purchase Price Allocation		Fineline Purchase Price Allocation
Consideration:
Cash	$	209	$	657
Promissory note payable to seller		—		100
Total consideration	$	209	$	757
Fair value of assets acquired:
Inventory	$	5	$	—
Fixed Assets		37		149
Covenant not to compete		30		22
Trade name		—		54
Customer list and backlog		137		179
Net assets acquired	$	209	$	404
Goodwill	$	—	$	353

The acquisitions were completed to support expansion of the business and broaden the Company’s customer base. We have accounted for these acquisitions as business combinations using the acquisition method of accounting. This method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.  There were no liabilities assumed as part of either the Huber or Fineline acquisitions.  Pro forma historical results of operations related to both acquisitions during the period prior to the acquisition date have not been presented because they are not material to our consolidated statements of operations and comprehensive income (loss).  The results of operations related to the businesses acquired have been included in the Company’s consolidated statements of operations since the date of acquisition, respectively. The fair value determination of assets recorded are those of management. The fair value determination of the customer list and backlog was based on the excess of earnings method which is based on the prospective net cash flows of the existing customers. The fair value determination of the trade name was based upon a relief from royalty approach which assesses the royalty savings an entity realizes since it owns the asset and isn’t required to pay a third party license for its use. The fair value determination of the covenants no to compete was based upon a discounted cash flow model.