3. Acquisition

6 Months Ended

Dec. 31, 2015

Text Block [Abstract]

Acquisition

On February 26, 2014, the Company acquired substantially all the assets of a privately owned company consisting principally of inventory, fixed assets, and intangible assets related to the production and sale of a variety of laboratory and pharmacy balances and scales. The acquisition was pursuant to an asset purchase agreement whereby the Company paid the sellers $700,000 in cash, 126,449 shares of Common Stock valued at $427,500 and agreed to make additional cash payment based on a percentage of net sales of the business acquired equal to 8% for the period ended June 30, 2014 annualized, 9% for the year ended June 30, 2015, 10% for the year ending June 30, 2016 and 11% for the year ending June 30, 2017, estimated at a present value of $460,000 on the date of acquisition. Payments related to this contingent consideration for each period are due in September following the fiscal year. Contingent consideration payments amounted to $100,900 and $98,900 during the six month periods ended December 31, 2015 and 2014, respectively.

The products, which are similar to the Company’s other Benchtop Laboratory equipment, and in many cases used by the same customers, are marketed under the Torbal® brand. The principal customers are pharmacies, pharmacy schools, universities, government laboratories, and industries utilizing precision scales. The products are sold primarily on a direct basis, including the Company’s e-commerce site.

The Company allocated the purchase price based on its valuation of the assets acquired, as follows:

Curent assets	$	144,000
Property and equipment		118,100
Goodwill *		115,400
Other intangible assets		1,210,000
Total Purchase Price	$	1,587,500

*See Note 8, “Goodwill and Other Intangible Assets”.

Of the $1,210,000 of the acquired other intangible assets, $570,000 was assigned to technology and websites with a useful life of 5 years, $120,000 was assigned to customer relationships with an estimated useful life of 9 years, $140,000 was assigned to the trade name with an estimated useful life of 6 years, $110,000 was assigned to the IPR&D with an estimated useful life of 3 years, and $270,000 was assigned to non-compete agreements with an estimated useful life of 5 years.

In connection with the acquisition, the Company entered into a three-year employment agreement with the previous Chief Operating Officer of the acquired business as President of the Company’s new Torbal Division and Director of Marketing for the Company. The agreement may be extended by mutual consent for an additional two years.