R. BUSINESS ACQUISITION

On July 23, 2019, the Company’s wholly-owned subsidiary, OETA, Inc., purchased substantially all the assets of OneEvent Technologies, Inc., a Mount Horeb, Wisconsin company established in 2014 for $6,501,000, including cash of $4,020,000, forgiveness of a note receivable of $2,364,000 and a potential earn out, which is based on earnings over a seven year period. The current estimated value of the earn out is $117,000, however, the value of the earn out will vary depending on actual earnings over the seven year period. OneEvent’s systems provide early warning of conditions that could ultimately lead to significant losses. The initial application combines patented machine learning, digital sensors and cloud-based technology to continuously monitor freezers and refrigerators, instantly detecting and alerting users to potential safety issues around pharmaceuticals and food. The OneEvent® system also has the ability to continually measure other factors such as smoke, carbon monoxide, motion, humidity, and moisture. Pursuant to the terms of the transaction, the seller has subsequently changed its corporate name, and OETA, Inc. has now legally adopted the corporate name, OneEvent Technologies, Inc.

The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of their acquisition date.


	(in thousands)

Cash	$	287
Receivables		14
Inventory		307
Other current assets		105
Property, plant and equipment		35
Intangibles		2,141
Goodwill		3,831
Right-of-Use Lease Assets		59
Total assets acquired		6,779
Less: Current liabilities assumed		255
Lease Liability - Noncurrent		23
Net assets acquired	$	6,501

The acquired intangibles primarily include technology software and patents that will be amortized over a period of 10-15 years. The amount of goodwill recorded reflects expected earning potential of the acquired technology software and patents. The recorded goodwill is deductible for income tax purposes over a fifteen year period. The Company’s results of operations for 2019 include revenue net of sales deductions of ($38,000) and loss of $1,103,000 from the acquired business from the date of acquisition through December 31, 2019. The following pro forma condensed consolidated results of operations has been prepared as if the acquisition had occurred as of January 1, 2018.


	(unaudited)
	(in thousands, except per share data)
	Year Ended
	December 31, 2019		December 31, 2018

Net sales	$	308,561	$	323,424
Net earnings		40,822		38,391

Net earnings per share (basic and diluted)	$	5.81	$	5.48
Weighted average shares outstanding (basic and diluted)		7,027		7,005

The unaudited pro forma financial information presented above is not intended to represent or be indicative of what would have occurred if the transactions had taken place on the dates presented and is not indicative of what the Company’s actual results of operations would have been had the acquisition been completed at the beginning of the periods indicated above. The pro forma combined results reflect one-time costs to fully merge and operate the combined organization more efficiently, but do not reflect anticipated synergies expected to result from the combination and should not be relied upon as being indicative of the future results that the Company will experience.