Acquisitions

6 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisitions

16. Acquisitions

Solsys Medical, LLC

On September 27, 2019, the Company completed the Solsys Acquisition. The purchase price was approximately $108.6 million, based on the Company's issuance of 5,703,082 shares of Misonix common stock as acquisition consideration, valued at $19.05 per share. In addition, business transaction costs incurred in connection with the acquisition were $4.5 million, of which $1.8 million and were incurred in the six months ended December 31, 2019. These fees were charged to general and administrative expenses on the Statement of Operations. In addition, approximately $1.4 million of the transaction costs were capitalized to additional paid in capital, in connection with the registration of the underlying stock issued in the transaction.

The transaction was accounted for using the acquisition method of accounting in accordance with FASB ASC Topic 805. U.S. GAAP requires that one of the companies in the transactions be designated as the acquirer for accounting purposes based on the evidence available. Misonix was treated as the acquiring entity for accounting purposes.

The preliminary Solsys purchase price allocation as of September 27, 2019, is shown in the following table:

Cash	$	5,525,601
Accounts receivable		5,480,890
Inventory		98,911
Prepaid expenses		88,863
Property and equipment		673,353
Lease assets		946,617
Indemnified assets		250,000
Customer relationships		7,400,000
Trade names		12,800,000
Non-competition agreements		200,000
Accounts payable and other current liabilities		(4,794,878	)
Lease liabilities		(858,111	)
Deferred tax liability		(4,085,000	)
Notes payable		(23,915,701	)
Total identifiable net assets		(189,455	)
Goodwill		108,833,165
Total consideration	$	108,643,710

The fair values of the Solsys assets and liabilities are provisional and were determined based on preliminary estimates and assumptions that management believes are reasonable. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. These adjustments will primarily relate to certain short-term assets, intangible assets, and certain liabilities. The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information is available, including the completion of a valuation of the tangible and intangible assets, but no later than one year from the acquisition date.

The goodwill from the acquisition of Solsys, which is fully deductible for tax purposes, consists largely of synergies and economies of scale expected from combining the operations of Solsys and the Company's existing business.

The estimate of fair value of the Solsys identifiable intangible assets was determined primarily using the "income approach," which requires a forecast of all of the expected future cash flows either through the use of the multi-period excess earnings method or the relief-from-royalty method. Some of the more significant assumptions inherent in the development of intangible asset values include: the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows, the assessment of the intangible asset's life cycle, as well as other factors. The following table summarizes key information underlying intangible assets related to the Solsys Acquisition:

	December 31,		June 30,		Amortization
	2019		2019		Period
Customer relationships	$	7,400,000	$	-	15 years
Trade names		12,800,000		-	15 years
Non-competition agreements		200,000		-	1 year
Total	$	20,400,000	$	-

Solsys' operations were consolidated with those of the Company for the period September 27, 2019 through December 31, 2019. Had the acquisition occurred as of the beginning of fiscal 2018, revenue and net loss, on a pro forma basis excluding transaction fees and the one time tax benefit, for the combined company would have been as follows:

	For the six months ended
	December 31,
	2019			2018
Revenue	$	39,212,703		$	21,890,347
Net loss	$	(9,246,809	)	$	(5,161,602	)