9. Investment in Morion, Inc.

12 Months Ended

Apr. 30, 2013

Investment Holdings [Text Block]

Investment Holdings [Text Block]

9.  Investment in Morion, Inc.

The Company has an investment in Morion, Inc., a privately-held Russian company, which manufactures high precision quartz resonators and crystal oscillators.  The Company’s investment consists of 4.6% of Morion’s outstanding shares, accordingly, the Company accounts for its investment in Morion on the cost basis.  This investment is included in investment in and loans receivable from affiliates in the accompanying balance sheets.

During the fiscal years ended April 30, 2013 and 2012, the Company acquired product from Morion in the aggregate amount of approximately $54,000 and $224,000, respectively, and the Company sold product to Morion in the aggregate amount of approximately $355,000 and $1,162,000, respectively.  At April 30, 2013, accounts receivable included $144,000 due from Morion and $8,000 were payable to Morion.

On October 22, 2012, the Company entered into an agreement to license its rubidium oscillator production technology to Morion.  The agreement requires the Company to sell certain fully-depreciated production equipment currently owned by the Company and to provide training to Morion employees to enable Morion to produce a minimum of 5,000 rubidium oscillators per year.  Morion will pay the Company approximately $2.7 million for the license and the equipment plus 5% royalties on third party sales for a 5-year period following an initial production run.  During the same 5-year period, the Company commits to purchase from Morion a minimum of approximately $400,000 worth of rubidium oscillators per year although Morion is not obligated to sell that amount to the Company.  In November 2012, Morion paid the Company a $925,000 deposit under this agreement.   This amount is considered deferred revenue and is included in accrued liabilities on the accompanying consolidated balance sheet.  The United States Department of State has approved the technology transfer which is expected to be completed within a year from the date of the agreement.