Fair Value Measurements

6 Months Ended

Dec. 31, 2013

Fair Value Measurements Disclosure [Text Block]

Note 8 — Fair Value Measurements

Pursuant to the accounting guidance for fair value measurements, the Company uses a three-tier fair value hierarchy to prioritize the inputs for measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3).

Set forth below is a summary of liabilities that are measured at fair value on a recurring basis based on the three-level valuation hierarchy:

	Quoted
	Market Prices		Significant
	For		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Liabilities
At December 31, 2013 — Contingent earnout liability	$	—	$	—	$	4,815,000	$	4,815,000

At June 30, 2013 — Contingent earnout liability	$	—	$	—	$	3,315,000	$	3,315,000

This liability relates to the estimated fair value of future earnout payments to former SeaBotix Inc. stockholders for the earnout period ending December 31, 2014.

Set forth below are the changes in the Level 3 liability from June 30, 2013 to December 31, 2013:

	Fair Value
	of
	Contingent
	Earnout
	Liability

Balance at June 30, 2013	$	3,315,000
Adjustment to contingent earnout liability		1,500,000
Balance at December 31, 2013	$	4,815,000

The Company determined the fair value of the contingent earnout liability at December 31, 2013 and June 30, 2013 using a probability weighted approach. The principal inputs to the approach include expectations of the specific business’s revenue in calendar years 2013 and 2014 and the probability of achieving required gross profit margin targets using an appropriate discount rate. Given the use of significant inputs that are not observable in the market, the contingent liability is classified within Level 3 of the fair value hierarchy. There were no significant changes to this methodology during the six month period ended December 31, 2013 and the year ended June 30, 2013.

Fair values of accounts receivable, accounts payable, accrued expenses, dividends payable and income taxes payable reflected in the December 31, 2013 (Unaudited) and June 30, 2013 Consolidated Balance Sheets approximate carrying values on those dates.