Note 8. Supplemental Balance Sheet Information

Inventories: Inventories as of January 31, 2015 and July 31, 2014, respectively, were as follows:

	January 31,2015		July 31, 2014
Raw material and component parts	$	6,836	$	5,900
Work in progress		2,834		2,077
Finished goods		6,867		7,157
	$	16,537	$	15,134

Property and Equipment: Property and equipment as of January 31, 2015 and July 31, 2014, respectively, were as follows:

	January 31, 2015		July 31, 2014
Land	$	1,688	$	984
Building and improvements		6,667		6,650
Machinery and equipment		10,375		9,023
Furniture and fixtures		1,401		1,182
Software		1,116		1,113
Construction in progress		94		153
		21,341		19,105
Less accumulated depreciation		11,004		10,320
	$	10,337	$	8,785

Other Intangible Assets: Information regarding the Company’s other intangible assets as of January 31, 2015 and July 31, 2014, respectively, were as follows:

	Gross Carrying Value		Accumulated Amortization		Net
	January 31, 2015
Proprietary know-how	$	4,208	$	2,381	$	1,827
Customer relationships		5,260		119		5,141
Trademark		5,944		--		5,944
Tradename		2,960		60		2,900
Licensing agreement		5,694		3,030		2,664
Other intangibles		1,123		25		1,098
Patents		2,444		1,029		1,415
	$	27,633	$	6,644	$	20,989

	July 31, 2014
Proprietary know-how	$	4,208	$	2,208	$	2,000
Customer relationships		806		61		745
Trademark		5,944		--		5,944
Tradename		447		44		403
Licensing agreement		5,694		2,895		2,799
Other intangibles		26		6		20
Patents		2,375		903		1,472
	$	19,500	$	6,117	$	13,383

Goodwill of $4,871,000, other intangibles of $8,180,000 and a contingent payment obligation of $2,561,000 are the result of the Sterimedix Acquisition. Goodwill of $439,000 and other intangibles of $765,000 are the result of the acquisition of the private, OEM company completed on May 3, 2014. Goodwill of $1,459,000 and other intangibles of $936,000 are a result of the acquisition of M.I.S.S. Ophthalmics Limited completed on July 8, 2013. Goodwill of $10,660,000 and proprietary know-how of $3,707,000 are a result of the reverse merger transaction completed on September 21, 2005.

The Company did not incur costs to renew or extend the term of acquired intangible assets during the period ended January 31, 2015. Amortization expense is included in general and administrative expense and was $295,000 and $543,000 for the three and six months ended January 31, 2015, respectively, and $186,000 and $366,000 for the three and six months ended January 31, 2014, respectively. Amortization expense for the next five years is expected to approximate $1.3 million annually.

Pledged Assets; Short and Long-Term Debt: Short- and long-term debt as of January 31, 2015 consisted of the following:

Revolving Credit Facility: The Company has a credit facility with a bank which allows for borrowings of up to $9.5 million. There were no borrowings under this facility at January 31, 2015.

Equipment Line of Credit: Under this credit facility, the Company may borrow up to $1.0 million. There were no borrowings under this facility at January 31, 2015.

Term Loan Facility: The Company has a credit facility with a bank which allows for borrowings of up to $13.0 million with $6.5 million restricted for earn-out payments required under the Sterimedix Acquisition Agreement. There was $2.75 million borrowed under this facility at January 31, 2015. The advances under the term loan are amortized quarterly over five years.

These facilities bear interest based on either the one-, two- or three-month LIBOR plus 1.75 percent and adjusting each quarter based upon our total debt to earnings before interest, taxes, depreciation and amortization (“EBITDA). As of January 31, 2015, interest under the facilities was 1.90 percent. The unused portion of the facilities is charged at a rate of 0.20 percent. The termination date of the facilities is February 28, 2018. The facilities are collateralized by substantially all of the Company’s assets

These facilities have two financial covenants: a maximum total debt to EBITDA ratio of 2.25 times and a minimum fixed charge coverage ratio of 1.25 times. As of January 31, 2015, the total debt to EBITDA ratio was 0.33 and the minimum fixed charge coverage ratio was 14.0 times. The facility restricts the payment of dividends if, following the distribution, the fixed charge coverage ratio would fall below the required minimum.

Deferred Revenue: Deferred revenue as of January 31, 2015 and July 31, 2014, respectively, consisted of the following:

	January 31, 2015		July 31, 2014
Deferred revenue – Alcon, Inc. settlement	$	13,886	$	14,530
Less: Short-term portion		1,288		1,288
Long-term portion	$	12,598	$	13,242