9. Disposition of a Component of an Entity

On March 1, 2011, the Company entered into an Asset Purchase Agreement (the “Agreement”) with Globalrange Corporation (“Globalrange”). Under the terms of the Agreement, the Company sold to Globalrange certain rights and assets relating to our electronic data interchange business for the agricultural chemicals industry (the “AgChem EDI Business”). Because the AgChem EDI Business was not a separate entity or reportable segment, the transaction was recorded as a disposition of a component of an entity.

As part of the purchase price for the AgChem EDI Business, Globalrange agreed to assume certain liabilities of ARI relating to the AgChem EDI Business, primarily consisting of unearned revenue (as defined in the Agreement). Globalrange will make earn-out payments to ARI annually over a four-year period following the closing date, with an initial pre-payment of $80,000. The amounts of such earn-out payments will be determined based on collections received by Globalrange relating to the AgChem EDI Business during such period, and will be subject to a floor and cap, in accordance with the terms of the Agreement.

The fair value of the earn-out was originally estimated at $580,000 less an imputed discount of $97,000, based on the present value of the estimated earn-out payments (the “Earn-out Receivable”), discounted at 14%, which was the prevailing rate of interest charged on the Company’s debt at the time of the sale. The discount is amortized to interest income, which is included in other income on the consolidated statement of income, over the life of the earn-out.

An assessment of the expected future cash flows of the Earn-out Receivable is performed annually in the third fiscal quarter based on historical receipts over the previous twelve-month period. Changes in estimate and cash received in excess of expected cash receipts are recorded as a gain in other expense (income). The Company did not perform an assessment during the periods ended January 31, 2013 and 2012.

The remaining earn-out receivable includes $60,000 in prepaid expenses and other and $72,000 in other long term assets on the unaudited balance sheet at January 31, 2013, with estimated receivables as follows:


Year Ending July 31,
2013	$	24
2014		86
2015		48
Total Estimated Payments		158
Less imputed interest		(26)
Present value of Earnout	$	132

The following table shows changes in the earn-out receivable during the three and six months ended January 31, 2013 and 2012 respectively:


	Three months ended January 31				Six months ended January 31
	2013		2012		2013		2012
Beginning Balance	$	177	$	314	$	218	$	384
Net receipts		(53)		(98)		(102)		(179)
Imputed interest recognized		8		12		16		23
Ending Balance	$	132	$	228	$	132	$	228